The European Central Bank Chief Mario Draghi said that it has done as much as it can to support the euro area economy, and now governments should do their part to strengthen the region.
"The ECB has done as much as it can to stabilize markets and support the economy," President Draghi told the French parliament on Wednesday.
Now governments and parliaments should do all they can to raise growth potential and build a stronger and more stable EMU, he added.
Although euro area has made much progress in recent years, it still faces many challenges, Draghi said. The ECB stands ready to act again when needed, he reiterated, adding that there are limits to what monetary policy can achieve.
Monetary policy cannot create real economic growth, the ECB Chief said. "If growth is stalling because the economy is not producing enough or because firms have lost competitiveness, this is beyond the power of the central bank to fix," Draghi said.
Draghi again defended ECB's bond buying program dubbed Outright Monetary Transactions, saying that the program has been effective in restoring market functioning and trust in the euro area.
The policymaker urged member countries to ensure that fiscal consolidation, which is necessary to contain debt levels, is made growth-friendly.
Further, Draghi requested governments to finish their work to establish the Single Supervisory Mechanism. "Banking Union is not the only example of where closer union is needed," Draghi said. Ultimately, the euro area needs to be drawing closer in all fields of economic policy.
Yesterday, Draghi as well as another ECB policymaker Benoit Coeure said at separate events that the bank will not exit from the accommodative monetary policy in the near term. The overall economic outlook still warrants an accommodative stance as inflation is low and unemployment is high, Draghi said.
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