European Central Bank President Mario Draghi urged governments to revive investment that is essential to bring in a sustainable recovery in the bloc.
"A decisive rise in investment is essential to bring inflation where we would want to see it, to kick-start the economy and to bring down unemployment," he said at Eurofi Financial Forum in Milan late Thursday.
The central banker said the governments should make the regulatory environment more favorable to economic growth and also give companies easy access to diversified source of financing.
He also called for government guarantees to support lending to small and medium sized enterprises. Within the existing framework, countries should explore how to support productive investment.
He cited Spain as an encouraging example in this regard. Draghi expects investment in Spain to rebound strongly over the coming two years due to its business friendly reforms and lower personal and corporate taxes.
"If we don't manage to get investment going again, we will weaken the economy in the short run and undermine its prospects in the long run," Draghi said.
Last week, the ECB last week lowered key refinancing rate to a record low 0.05 percent from 0.15 percent and unveiled programs to purchase private debt securities such as asset-backed securities and covered bank bonds.
Draghi expects the bank's two purchases programmes to effectively complement the TLTROs in enhancing the functioning of the monetary policy transmission.
Draghi observed that no monetary stimulus, indeed no fiscal stimulus, can be successful unless such measures are accompanied by the right structural policies that foster potential growth and instill confidence.
Further, he repeated that the ECB stands ready to take further action if needed, in compliance with its mandate to maintain price stability.
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