Mario Draghi: ECB should Become More Active
Mario Draghi says he won’t sit back and wait for stimulus to reach the economy.
The European Central Bank president said a planned asset-purchase program shows that policy makers will steer the size of the institution’s balance sheet to avert deflation.
The ECB is moving to a more “active and controlled management of our balance sheet,” Draghi said in his quarterly testimony to European lawmakers.
Even after cutting borrowing costs for banks to record lows and offering long-term loans, Draghi is struggling to persuade them to take more ECB cash to finance lending to the real economy.
Economic growth in the euro area came to a halt in the second quarter and Draghi said yesterday that recent indicators have given no indication that the “sharp decline” in economic activity in the region has stopped.
The ECB currently has a policy of meeting all banks’ demands for liquidity, meaning that lenders determine how much central-bank cash they take.
“The bottom line is that the ECB is starting to buy assets outright,” said Marco Valli, chief euro-area economist at UniCredit SpA in Milan. “This marks a discontinuity in policy.”
Source: Bloomberg- Mario Draghi: ECB should Become More Active
