Introductory statement to the press conference (with Q&A)

Mario Draghi, President of the ECB,
Vítor Constâncio, Vice-President of the ECB,
Frankfurt am Main, 1 August 2013

Jump to the transcript of the questions and answers

Ladies and gentlemen, the Vice-President and I are very pleased to welcome you to our press conference. We will now report on the outcome of today’s meeting of the Governing Council.

Based on our regular economic and monetary analyses, we decided to keep the key ECB interest rates unchanged. Incoming information has confirmed our previous assessment. Underlying price pressures in the euro area are expected to remain subdued over the medium term. In keeping with this picture, monetary and, in particular, credit dynamics remain subdued. Inflation expectations for the euro area continue to be firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2% over the medium term. At the same time, recent confidence indicators based on survey data have shown some further improvement from low levels and tentatively confirm the expectation of a stabilisation in economic activity. Our monetary policy stance continues to be geared towards maintaining the degree of monetary accommodation warranted by the outlook for price stability and promoting stable money market conditions. It thereby provides support to a gradual recovery in economic activity in the remaining part of the year and in 2014. Looking ahead, our monetary policy stance will remain accommodative for as long as necessary. The Governing Council confirms that it expects the key ECB interest rates to remain at present or lower levels for an extended period of time. This expectation continues to be based on an unchanged overall subdued outlook for inflation extending into the medium term, given the broad-based weakness in the economy and subdued monetary dynamics. In the period ahead, we will monitor all incoming information on economic and monetary developments and assess any impact on the outlook for price stability.

Let me now explain our assessment in greater detail, starting with the economic analysis. Following a six-quarter economic contraction in the euro area, recent confidence indicators based on survey data have shown some further improvement from low levels and tentatively confirm the expectation of a stabilisation in economic activity at low levels. At the same time, labour market conditions remain weak. Looking ahead to the remainder of the year and to 2014, euro area export growth should benefit from a gradual recovery in global demand, while domestic demand should be supported by the accommodative monetary policy stance as well as the recent gains in real income owing to generally lower inflation. Furthermore, the overall improvements in financial markets seen since last summer appear to be gradually working their way through to the real economy, as should the progress made in fiscal consolidation. This being said, the remaining necessary balance sheet adjustments in the public and private sectors will continue to weigh on economic activity. Overall, euro area economic activity should stabilise and recover at a slow pace.

The risks surrounding the economic outlook for the euro area continue to be on the downside. Recent developments in global money and financial market conditions and related uncertainties may have the potential to negatively affect economic conditions. Other downside risks include the possibility of weaker than expected domestic and global demand and slow or insufficient implementation of structural reforms in euro area countries.

According to Eurostat’s flash estimate, euro area annual HICP inflation was 1.6% in July 2013, unchanged from June. Annual inflation rates are currently expected to temporarily fall over the coming months, owing particularly to base effects relating to energy price developments twelve months earlier. Taking the appropriate medium-term perspective, underlying price pressures are expected to remain subdued, reflecting the broad-based weakness in aggregate demand and the modest pace of the recovery. Medium to long-term inflation expectations continue to be firmly anchored in line with price stability.

The risks to the outlook for price developments are expected to be still broadly balanced over the medium term, with upside risks relating to stronger than expected increases in administered prices and indirect taxes, as well as higher commodity prices, and downside risks stemming from weaker than expected economic activity.

Turning to the monetary analysis, underlying money and, in particular, credit growth remained subdued in June. Annual growth in broad money (M3) decreased in June to 2.3%, from 2.9% in May. Moreover, annual growth in M1 decreased to 7.5% in June, from 8.4% in May. The annual rate of change of loans to the private sector weakened further. While the annual growth rate of loans to households (adjusted for loan sales and securitisation) remained at 0.3% in June, broadly unchanged since the turn of the year, the annual rate of change of loans to non-financial corporations (adjusted for loan sales and securitisation) was -2.3% in June, after -2.1% in May. Weak loan dynamics continue to reflect primarily the current stage of the business cycle, heightened credit risk and the ongoing adjustment of financial and non-financial sector balance sheets. The bank lending survey for the second quarter of 2013 confirms that borrowers’ risk and macroeconomic uncertainty remained the main factors restraining banks’ lending policies. At the same time, the degree of net tightening of credit standards for loans to non-financial corporations remained unchanged in the second quarter of 2013, compared with the first quarter, and declined for loans to households.

Since the summer of 2012 substantial progress has been made in improving the funding situation of banks and, in particular, in strengthening the domestic deposit base in a number of stressed countries. In order to ensure an adequate transmission of monetary policy to the financing conditions in euro area countries, it is essential that the fragmentation of euro area credit markets declines further and that the resilience of banks is strengthened where needed. Further decisive steps for establishing a Banking Union will help to accomplish this objective.

To sum up, the economic analysis indicates that price developments should remain in line with price stability over the medium term. A cross-check with the signals from the monetary analysis confirms this picture.

As regards fiscal policies, in order to bring debt ratios back on a downward path, euro area countries should not unravel their efforts to reduce government budget deficits. The emphasis should be on growth-friendly fiscal strategies which have a medium-term perspective and combine improving the quality and efficiency of public services with minimising distortionary effects of taxation. To reinforce the overall impact of such a strategy, Member States must step up the implementation of the necessary structural reforms so as to foster competitiveness, growth and job creation. Removing rigidities in the labour market, lowering the administrative burden and strengthening competition in product markets will particularly support small and medium-sized enterprises. These structural reform measures are essential to bring down the currently high level of unemployment, in particular among the younger citizens of the euro area.

We are now at your disposal for questions.

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Question: Mr Draghi, first of all, I would like to know whether the Governing Council discussed cutting rates today and whether the decision to hold rates at 0.5% was unanimous.

My second question is regarding forward guidance. You have just confirmed the forward guidance you gave in July, and the market impact you had in July has fizzled out by now. It had an impact, but then the impact weakened. Now, other central banks started off like the ECB – they had a vague form of forward guidance and then progressed further and introduced a more explicit form of forward guidance. I would like to ask you whether you would rule out that the ECB could go down a similar path.

Draghi: Incoming information has confirmed our previous assessment. Underlying price pressures remain subdued, as does money and credit growth. Incoming survey data in July showed some further improvement from low levels and tentatively confirmed the expected stabilisation. So, against this background, our monetary policy stance will remain accommodative for as long as necessary. Basically, we have unanimously confirmed the forward guidance we gave last time.

We want to be clear in this – and this is a partial response to your second question – we want to be clear about our assessment of the inflation outlook over the medium term, and about our “reaction function”. We want markets to see our reaction function linked in time to the outlook for price stability. So, I will repeat what we stated, and this was unanimous: the Governing Council confirms that the key ECB interest rates, including the rate on the deposit facility , will remain at present or lower levels for an extended period of time. This expectation continues to be based on an unchanged overall subdued outlook for inflation extending in the medium term, given the broad-based weakness in the economy and subdued monetary dynamics. So, how long will this horizon be? As long as it is our assessment that inflation remains subdued, as indicated by weak economic activity, weak credit and weak monetary aggregates. As I have said, this assessment was unanimous. All interest rates, including the rate on the deposit facility, are part of that statement. At the same time, let me stress this once again, liquidity will remain abundant. It will stay ample for as long as needed so as to guarantee banks full access to funding, and fixed rate full allotment will stay in place until at least July 2014, although let me underline that there is no connection between this date and the extended period of time to which the forward guidance refers. Let me also say that current expectations – and this is a partial response to your last question – of rate hikes in money markets are, according to our assessment unwarranted. As I have said, current data confirm our baseline scenario, and risks are on the downside. So, developments have to be significantly better than our current baseline scenario for an outlook for price stability in order for us to change our guidance.

Question: Mr Draghi, how confident can you be in your outlook of a gradual recovery, given credit contraction that is at least in part driven by the supply side? And, since your last measures appear not to have done much to spur credit growth, how much longer can you wait before launching targeted measures that could help credit grow?

A follow-up question: I do not think you have really answered the question on the decision on interest rates. Did you discuss cutting them? Was that decision unanimous as well?

Draghi: Again, on the last question, we discussed our forward guidance and that was decided unanimously.

Now, on credit growth: I am not really sure that our last measures were completely ineffective. I think that they were effective in compressing volatility and, given the fact that it is very hard to assess the effectiveness of such measures in the midst of a great deal of other communication – quite, I would say, abundant and powerful communications from a variety of sources – I would definitely say they were successful in terms of compressing volatility and that they were partly successful in terms of interest rates, short-term rates. In other words, it depends very much on which rates you compare the current ones with. So, you would see that if you compare them with the rates prevailing on a certain date, the measures were successful, and that if you compare them with rates prevailing before the statement of the Federal Open Market Committee, they were partly successful. On credit growth; we have to acknowledge that underlying loan growth has remained subdued over recent quarters, and that this has been true for quite a time. We know that there are several reasons for this: first and foremost, weak economic demand, second, heightened credit risk and, third, continued deleveraging by households and enterprises. On the supply side, we know that fragmentation is still an issue. So, we should expect an improvement in all these factors. Let me give you a list of some examples of improvements on the fragmentation front. We continue to witness capital inflows and we can see that the dispersion, the cross-country dispersion of the rates of growth in deposits in the banking system is now at the same level as it was in 2007. So, if we look at the deposit component of bank funding, I would say that fragmentation is over, that it is not an issue anymore. On the lending side, however, we are still witnessing some fragmentation. But again, if one really wanted to provide a little more, let me say, “up-beat” pieces of news, one would look at the cross-country dispersion of lending rates, and would see that that has stabilised. In other words, it has not increased. We also know that credit growth is a lagging indicator of growth and the real economy, so that we do expect credit trends to improve, but with a certain delay with respect to the improvement in the real economy.

Question: First, did you discuss tying the forward guidance to a quantitative threshold or trigger, or is this a discussion that you might want to have in the future? If yes, can we expect it to be introduced sometime soon?

Second, did you discuss introducing minutes? What is the latest on this issue?

Draghi: With regard to the first question, no we did not discuss that. However, our formulation of forward guidance is in line with our strategic framework, which is anchored in our assessment of the medium-term outlook for inflation, or price stability. And this outlook depends on economic activity and on money and credit developments. So this is our strategic framework, within which we can say that medium-term inflationary expectations remain firmly anchored. Within this framework, we did not discuss the introduction of thresholds or quantitative benchmarks.

On the minutes and communication, we are not starting from scratch. All central banks have changed their communication throughout the years. This central bank changed the way in which it communicated with the introduction or with the publication of forecasts a few years ago, and even earlier with the precise definition of inflation rate we aim at. Other central banks have taken on our customs and have included press conferences in their communication strategies. It was only natural that the Governing Council should ask for a richer way of communicating our deliberations beyond what is already a fairly transparent way of communicating - given that we already have monthly press conferences, the Monthly Bulletin, and many speeches and other forms of communication. In any event, given the increasing complexity of certain types of communication, but also in the long run, the Governing Council thought that it would be wise – as I have said – to have a richer communication of the rationale behind its decisions. At this early stage, I can only be relatively general. I think that it is necessary to give an account of why certain decisions have been taken or why they have not been taken, as well as to give a sense of the discussion that has taken place within the Governing Council. On the other hand, we are not a one-country set-up: we are not the United States, the United Kingdom or Japan. We are members of a 17-country euro area, so it is especially important that any modifications we introduce do not put at risk or call into question the independence of the members of the Governing Council. I should remind everybody that members of the Governing Council sit around that table in their personal capacity, not as representatives of their own countries. They are acting in the interests of the euro area and of the euro. Thus, any change in communication policy should respect this essential ingredient of our monetary policy, which, in a sense, forms the basis of the credibility that this institution has acquired throughout the years. More specifically, the Executive Board will present a proposal to the Governing Council for discussion during this fall.

Question: I have two questions on forward guidance. First, it is still not entirely clear to me what the difference is between “forward guidance” and just a forecast of the economic outlook for the economy and of inflation. Is there actually a difference, or is it like adding value to a forecast?

Second, with regard to the minutes, one of the reasons that the ECB has not published minutes so far is the fear that debates will become politicised. What made you change your view about this risk? It seems to me that the debate in Europe has even become more politicised in recent months, and not less so. What made you change your stance?

Draghi: In response to the second question, clearly, that is where the challenge is – to be able to provide you and the markets with greater and richer information without putting into question the independence of the members of the Governing Council and without politicising the discussion, because that would certainly be a big loss. We hope that we will be able to cope with this challenge.

With regard to the first question, it is not really a forecast; it is more than a forecast. Allow me to point out that the statement says “ We expect”. It does not say “It is expected” and it does not say “An international institution expects”; it says “We – the policy-makers – expect the key ECB interest rates to remain at the present or lower levels for an extended period of time”. So, it is an expectation by a very specific set of policy-makers.

Question: First question, on the economy: you commented on improved sentiment and the situation getting better. A very simple question: are we still in recession or are we already out of recession in the euro area?

And the second question – I will give it another try: was the decision on interest rate cuts or no interest rate cuts unanimous or not? And if you do not comment on it, why do you not comment on it? Or maybe I missed it, then I do apologise.

Draghi: No, you did not miss it. We actually only discussed forward guidance and within the confirmation of forward guidance you have an implicit decision about today’s interest rates. And the decision about forward guidance was, in fact, unanimous. By the way, it is not a decision in the sense that we take a decision each and every time. And here, I should say something. There was some discussion on whether we should repeat these words every time. I mean the words: “the Governing Council confirms that it expects the key ECB interest rates to remain…”. Now, because of an excess of prudence, we repeated them today. But we may not repeat them if we judge that you and the markets understand that a certain forward guidance is valid until further notice. So, in other words, we may not repeat the words if we are convinced that you and the markets understand that, if we do not say anything, it does not mean that we have changed our mind. It means that we stay with the same mind until we do change our mind! But that is an aside issue.

On the second question: again, I can refer to our statement here. It says: “ recent confidence indicators based on survey data have shown some further improvement from low levels and tentatively confirm the expectation of a stabilisation in economic activity” in the second part of the year. In other words, it seems that the signs we are seeing now confirm the baseline scenario of the ECB staff projections for the second part of the year.

Question: I want to get back to a point you said before. I believe you said that current expectations of rate hikes in money markets are unwarranted by your assessment. Is that kind of a warning in a sense that if that does not change next month, you might cut rates and next month you might take concrete steps if you consider money market rates to be unwarranted by your assessment?

And I want to get back to this rate cut question because, in this whole discussion of minutes and increased transparency, how can you have the forward guidance and an easing bias without having a discussion on rate cuts? Why do you have an easing bias if there is not even a discussion within the Governing Council as to whether or not it makes sense to cut rates?

Draghi: On the first point, I would say that we do not work on hypothesis. It is an assessment that we give now and we will certainly assess the situation based on the incoming data and on our medium-term assessment of economic activity, money and credit conditions and, of course, the medium-term outlook for prices and inflation.

On the second point, we have expressed the forward guidance; we have not reached the zero bound. Keep that in mind: we have not reached the zero bound. So, we have given forward guidance that said that, based on our medium-term outlook for inflation, conditional on economic activity and money and credit, interest rates are expected to stay where they are or go lower. And that is the key thing. And that is valid for an extended period of time. Again, let me stress that there is no precise deadline for this extended period of time. As a matter of fact, you can – as some of your colleagues have done – extract a reaction function and, from there, estimate what would be a reasonable extended period of time. And, as you know, some of your colleagues have done that.

Question: After the mid-July meeting, you issued a communiqué changing the rules for collateral. The communiqué calls the changes broadly neutral, if I recall correctly. The net impact though will be positive for core-country banks and negative for Italian banks and even more negative for Spanish banks. Isn’t this the opposite of what is needed at the moment? I mean these are exactly the two countries where credit is lacking.

The other question is about forward guidance again. You have just explained the question about an extended period of time, etc., and that you may not even repeat the rate decision in every communiqué, but another member…

Draghi: Only if we judge that you understand. It does not mean that we have changed our mind…

Question: Maybe you should ask us questions at the next press conference. Another member of the Executive Board said that this forward guidance would be revised monthly. Is that correct?

Draghi: No, he did not say that as a matter of fact. What he meant to say is that we may have to repeat it every month because we are not sure that you would actually get it unless we do so. That is what he meant. You can see the point. The point is that if we repeat it every month, you could infer from this that actually it is not forward guidance for an extended period of time but only for a month. And that is certainly not what the Governing Council wants.

On the other question about collateral, let me first state with some emphasis that the decisions we have taken do not weaken the Eurosystem’s collateral framework. The objective of these decisions was to have a consistent treatment of all classes of eligible collateral. To have consistent treatment means to enhance risk equivalence across all eligible assets. Let me give you two examples. First, on asset-backed securities (ABSs), we now have lower haircuts than before because the transparency and standardisation of this asset class has significantly improved. This is also because of the ineligibility of mixed-pool ABSs and close-links provisions and servicing provisions. There are lots of technical reasons why this asset class would deserve a lower haircut. At the same time, the single-A requirement remains more stringent than for the other asset classes, as it is defined on a second-best-rating basis. The second-best triple-B ABSs remain acceptable in the temporary framework only. That is one example. Another example is: we looked at covered bonds and there we distinguish now between retained ones that are more risky and therefore deserve a higher haircut and non-retained ones that are less risky and therefore have a lower haircut. Now, this had overall a minimal impact on the overall collateral and we will certainly review it at a proper time. At the country level, we estimate that the actual impact has been at most around 1%. Now, you have to judge this negative impact – and you are right, it went in this direction – against the positive impact that previous decisions had as far as some stressed countries are concerned. You have to look at it in a dynamic way across the overall set of decisions. Let me just mention some of those decisions. In December 2011 we lowered the rating requirement at issuance for some ABSs and we introduced the additional credit claims. In June 2012 we eased again the conditions for ABSs. In September 2012 we allowed ABS loans and credit claims in other currencies. You have to judge the most recent decisions in the context of the previous decisions which have broadened the collateral and the classes and eased the treatment of assets eligible as collateral. I think that is the way to look at this.

Question: Two questions. The first is if you see any risk of deflation in Europe or in some European countries like Portugal?

And my second question is on the minutes again because you said you represent 17 countries and, from 1 January 2014, 18 countries. Why do you take this decision? Don’t you fear that some of your colleagues may feel they have to represent in future more nationalistic issues?

Draghi: On the first question, if we define deflation as a generalised fall in the price level across broad categories of assets and sectors in a context of self-fulfilling expectations, we do not see deflation in any country in the euro area. We see price falls for selected commodities or sectors which are due to a variety of reasons, whether you have some waning of the one-off effects of the indirect taxation, or you see other local effects of different kinds, or you see genuine price readjustments or relative price adjustments. We do not see deflation basically. We do not see deflation for any country at this point in time.

On the other point, if we were to come out with a communication that would put into question the independence of the members of the Governing Council, we would have clearly failed. So I would rule this out. I think there is some added value in communication only to the extent that this pillar of our credibility is not going to be threatened.

Question: Going back to the forward guidance, do I understand correctly that we should assume it is carrying on, even if you don’t repeat it every month? But then the question is how do we know if forward guidance has ceased: would the first signal be that you raise interest rates, or would you first say we are now at a position where we feel forward guidance is no longer appropriate – but then you might still hold rates?

Draghi: You are asking me a second or third derivative question. We just introduced it a month ago. Now, you are asking me what signals we would give if we were to change forward guidance in the coming months. You know very well that another monetary policy jurisdiction is now struggling exactly with this problem: whether it should do it through interest rates, through language which hints at tapering, by changing some liquidity provisions, or even by changing the assessment. In our case, we have an equivalent variety of ways to signal this, but going back to the statement here we say that this expectation of interest rates “continues to be based on an unchanged overall subdued outlook for inflation extending into the medium term” – so that is one thing one should look at – “given the broad-based weakness in the economy and subdued monetary dynamics”. I think you have all the parameters in your hands to judge the length of time and especially to judge when the language on forward guidance might be changed. Admittedly, these parameters are not specified in quantitative terms as thresholds, because, as I said before, our strategic framework is different, and it is rooted in the assessment of the medium-term outlook of inflation. But they are expressed in qualitative terms.

Question: And just a supplementary question on minutes. You already gave us a small idea of where you’re going on this – there is going to be the proposal in the autumn – but can you give us your thoughts on how this could work? Would it be conceivable that the minutes reflect the discussion without saying who said what? Would it be published with a month lag like other banks, or with the transcript?

Draghi: I prefaced my remarks on the minutes, or the communication, by saying that at this stage I have to be very, very unspecific. It is just the beginning. Also, we have to be cautious about putting forward our own personal views on what we would like to see, for two reasons: first of all because it is a highly complex discussion in our specific institutional set-up; and second, because it is one of those decisions on which there truly has to be a consensus. All Governing Council members ought to feel at ease with what will be produced. So, I urge caution on this – discipline – and unfortunately this doesn’t allow me to be more specific.

Question: The first question is on inflation. The Federal Reserve stated yesterday, and let me quote, “The committee recognises that inflation persistently below its 2% objective could pose risks to economic performance”, while you very much emphasise the positive benefits of low inflation for real incomes and domestic demand and the real economy. Does that mean that you are less worried about the consequences for the economy of inflation that is too low?

And the second question is on liquidity: you said that there is a need for ample liquidity in the banking sector, but we have seen the excess liquidity in the banking sector coming very close to the 200 billion threshold. So is this something you are worried about, is there a need to act, or could a fall below the 200 trigger an action by the ECB?

Draghi: On the first question, the answer is no. No in the sense that we are not oblivious to having inflation, which is significantly below our objective – not at all – and the forward guidance says exactly this. It says that we expect the key ECB interest rates to remain at the present lower levels for an extended period of time, and this is based on a subdued outlook for inflation, which extends itself into the medium term. So, we are not at all oblivious to the fact that inflation in the medium term undershoots our objective of inflation that is close to, but below, 2%. We also say that the justification for this is the broad-based weakness in the economy and the subdued monetary and credit dynamics.

On the second question on liquidity, I said, and I will re-state, that liquidity will remain ample as long as it is needed, and I said that the fixed rate full allotment will stay in place at least until July 2014. Basically, I said everything I wanted to say about liquidity.

Question: Mr President, you have shown that there have been some slight improvements in the euro area in economic terms. You have also mentioned the risks which are still there. One year after your speech in London, which was certainly a turning point in the crisis, could you please tell us where we stand right now in the crisis?

In addition, in your opinion, have the governments in the euro area made sufficient use of the time bought for them through the measures implemented by the ECB’s Governing Council?

Draghi: Let me welcome this question because it gives us an opportunity to take stock exactly of what has taken place since then. The Governing Council’s actions of last summer did indeed have some immediate benefits and we have gone through these benefits several times. First, spreads narrowed, rates fell, volatility became significantly lower. Basically, it produced a normalisation in financial market conditions. The second positive consequence was a reduction in fragmentation on the funding side, and now is that we are seeing something on the lending side as well. But it is just a very beginning. Third, we saw the beginning again of capital inflows in the euro area, which is still increasing. More generally, the OMT programme has reduced the general riskiness in the euro area, as shown by a variety of indicators. For example, the significant reduction in the TARGET2 balances with great benefits to the creditor countries. Furthermore, following the general reduction in riskiness, we saw a reduction in the size of the ECB’s balance sheet, as well as a significant reduction in risk premia if we look at what happened on the stock markets and, in general, capital markets. All this was basically necessary to reactivate the two channels through which the stimulus would ultimately reach the real economy. The interest rate channel, because interest rates went down, and the confidence channel, because risk went down. However, back in November last year, I also cautioned against people thinking that the OMT programme is the answer to all the problems in the world. When I was asked whether I was satisfied with the financing conditions, the answer was “ No, we are not satisfied at all. We are observing a fragmentation of the euro area, […], differences in the cost of funding that go beyond fundamentals. Therefore, our priority now is to repair the monetary policy transmission channels, so that our monetary policy will actually deliver.” And that is where we are now. We still have a lot of work to do on that front, but we are possibly starting to see the first signs that this significant improvement in confidence and in interest rates is finding its way through to the economy. But as I said these are tentative signs.

In answer to your second question, I would say that some of them certainly have. Some have made significant progress, others less so. But by and large, if you disregard the ECB’s actions and look at the policy implementation, I think that the progress has been quite significant over the past year on all fronts, in particular fiscal consolidation. In terms of structural reforms, the progress has been more staggered, i.e. some countries have undertaken more reforms than others. But all in all the picture seems to be better than it was a year ago.

Question: Mr Draghi, my first question refers to the previous question. You did not give any examples either of governments who have introduced a lot of reforms or of those which are lagging behind?

Second, in your introductory statement you say that one of the downside risks is slow and insufficient implementation. I recall that, more than one and a half years ago, you and the then President of the ECB, Mr Trichet, wrote a letter to Rome, to the then Prime Minister, in which you asked for reforms. If you compare the letter with what has been done since then, in terms of the reforms that have been implemented and the reforms that have been revised or even put back, what is your assessment of Italy’s reform agenda?

Draghi: I am sorry, I will have to answer like I do with your Italian colleagues. I will not comment on Italy, but more generally I can tell you that in some countries, for example Greece, there was a labour market reform, bank recapitalisation, fiscal consolidation, and the same thing in Ireland and Portugal. To some extent, labour market reforms have also been undertaken in Spain, and we can see clearly, look at the results rather than the list of reforms. Look at the results. If you look at the fiscal consolidation, you observe a few things. Let me give you a few numbers here, because I think that would help you. Now, we have an increase in fiscal consolidation, if you look at the structural improvements achieved across the board, I do not think you will find one country that has not improved. The overall improvement is really very significant. If you look at current account surpluses, the actual figures are quite impressive. There have been strong increases in exports, not only in Germany, but also in Spain and Italy, which shows that something has happened to reform and enhance competitiveness. Of course you also have all the other factors that I mentioned before, such as the increase in stock markets and the narrowing of spreads, and if you think that all these improvements in financial market conditions have been solely due to OMTs, then I thank you very much, but I don’t think we should exaggerate this too much. I think a lot of the improvements are the result of the governments’ actions, as well as the significant progress that has been made over the last year on the euro area governance front.

Question: I have two questions on the publication of minutes. First, in your opinion, will the publication of minutes show that the Deutsche Bundesbank and the ECB are not as far apart as the German public has been led to believe? And, second, do you think that the publication of minutes would weaken the need for dissenting members to communicate individually in public?

Draghi: I think it would be nice to achieve all these things. But, at this point in time, it would be extremely premature for me to comment on the specifics of what we – “we” meaning the Governing Council – will be able to produce in terms of improving communication on this front.

And let me wish all of you good holidays!

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