Draghi: Italy is not a threat. The Euro zone is now more resilient

The ECB President: “Political instability threatens the recovery of the countries but doesn’t touch the foundations of the Euro zone.” And comes back to push for reforms

Italy doesn’t scare anyone because no matter what happens to the Euro zone they will know how to absorb the impact and resist the pressure. After days of alarm and warnings, Mario Draghi reduces tension in other countries and markets. The President of the European Central Bank doesn’t see the risk of dreaded contagion like others. “Phases of political instability, like the one Italy is experiencing today, are less dangerous for the Euro zone than what it would have been in the past,” he sustains in the course of the press conference held at the end of the meeting of the Board of Governors at ECB. “The periods of instability like the ones that hit Greece, Portugal and now Italy, threaten the prospective of recovery of these countries but don’t touch the foundation of the Euro zone like what happened up until a few years ago.” This is because “today the Euro zone is more resilient compared to a few years ago and for 3 reasons: the results of credibility achieved, ECB’s response – a program of unlimited purchase of short-term government bond on the secondary market (Outright Monetary Transactions – OMT) and the important progress of governance that the Euro zone made in 2012.” However the ECB President encourages work because in any case stability remains a determining factor. Countries like Italy, he stresses, “must pursue the necessary reforms most of all for their own good rather than the market pressure.”

This is a warning, aimed also at all the other members of the Euro zone. Currently “there are still risks of a decrease in growth,” represented mainly by high energy prices caused by geopolitical problems and representative of “insufficient implementation of reforms in the Euro zone.” Draghi makes another request from the governments. The countries ofEuroland “must not slow down efforts of reducing the deficit and must continue to bring the public debt on a downward trend.” Furthermore, in light of the new community policy ‘Two pack’ on the budget law – which expects, among other things, the countries to present their budget plans to Brussels by October 15^th – governments must provide “budget plans of significant reprieve” in order to guarantee a stability of accounts for the long term as well. “Governments – continues the ECB President – must react in a more decisive method to strengthen the efforts for the necessary structural reforms for the job market and products.” The reforms, reminds Draghi, are unavoidable because they are essential. “This is needed not just to help the countries regain competitiveness and rebalance the entire Euro zone, but also to create a more flexible and dynamic economy that generates a sustainable growth and employment.”

To carry on as thus far established is the condition to give credibility to Europe and stifle the growing anti-European and euro-skeptic spirit in all of the EU area.  “We must be careful of this expression of the people’s will,” said Draghi responding to those who ask if he’s concerned about the next European elections in view of the growth of political parties such as the German euro-skeptical party AfD. “There is only one way to proceed: to go forward with our three pillars,” namely “to continue with the reforms” (this is up to the states), “to continue to ensure price stability” (this is the task of the ECB), and “to continue to work on economic governance” (task of the European Commission and the Eurogroup).