European Central Bank President Mario Draghi said on Tuesday that the central bank have not ruled out the possibility of negative deposit rates and other non-standard policy measures in the euro area.
Speaking at the farewell conference for Bank of Israel Governor Stanley Fischer in Jerusalem, Draghi said, "We will look with an open mind at these measures that are especially effective in our institutional setup and that fall within our mandate."
He also reiterated the warning that some of the non-standard measures could lead to unintended consequences. "This does not mean that they should not be used, but it does mean that we need to be aware of those consequences and manage them appropriately," the ECB official added.
After leaving interest rates unchanged earlier this month, Draghi did reveal that policymakers discussed the possibility of cutting the deposit rate below zero as well as measures to boost lending to small and medium-sized enterprises and steps to revive the market for asset-backed securities.
However, such unconventional options are "on the shelf" for now, he had said on June 6.
"There are numerous other measures - standard interest rate policy and non-standard measures - that we can deploy and that we will deploy if circumstances warrant," Draghi said today.
The central bank chief also reiterated that recent survey data suggest some improvement in the 17-nation economy, "but from low levels." While he expects export growth to benefit from a recovery in global demand, domestic demand is seen underpinned by accommodative monetary policy.
"The ECB's Governing Council has stressed that monetary policy will remain accommodative for as long as necessary," Draghi said. "We will monitor very closely all incoming information on economic and monetary developments and stand ready to act if necessary."
Monetary policy regaining its steering capacity, which had become lost for large parts of the euro area in mid-2012, is an important positive development, Draghi said.
The introduction of the non-standard policy measure called the outright monetary transactions along with standard measures helped in preventing the materialization of deflation risk, he pointed out.
Regarding banking reforms, Draghi said preparations for single supervision at the ECB are advancing and five work streams - banking system mapping, adoption of supervisory model, data reporting, legal issues and asset quality review - are underway.
"Formal adoption of the legal texts by the European Parliament will allow us to formalize the preparations and launch them so that we can be operational one year after adoption," he said.
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Forex News
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.