Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Draghi Says Europe Needs Higher Powers as Leaders Quarrel

European Central Bank President Mario Draghi
European Central Bank President Mario Draghi adjusts his paperwork ahead of a news conference to announce the bank's interest rate decision in Frankfurt, on Thursday, July 3, 2014. Photographer: Martin Leissl/Bloomberg

July 10 (Bloomberg) -- European Central Bank President Mario Draghi said the region needs more-centralized powers to push governments to overhaul their economies.

“There is a case for some form of common governance over structural reforms,” Draghi said in a speech in London yesterday. “This is because the outcome of structural reforms, a continuously high level of productivity and competitiveness, is not merely in a country’s own interest. It is in the interest of the union as a whole.”

Draghi has repeatedly said the ECB’s ultra-loose monetary policy isn’t sufficient to sustain the euro area’s fragile recovery if governments backslide. European Union finance ministers meeting in Brussels this week signaled a willingness to give politicians extra leeway so long as they take measures to fix their economies. They then clashed as Italian Prime Minister Matteo Renzi pushed back against austerity measures.

“Historical experience, for example of the International Monetary Fund, makes a convincing case that the discipline imposed by supranational bodies can make it easier to frame the debate on reforms at the national level,” Draghi said. “I would see merits in initiating, as a one-off, a new convergence process within the euro area -– one which ensures that all countries are truly in a position to benefit from membership.”

ECB Executive Board member Benoit Coeure said earlier yesterday that convergence could be complemented by action such as a European effort to increase investment by channeling private savings. It could culminate in the transfer of budgetary responsibilities to the European level, he said in Athens.

“But let me add an important note of caution,” Coeure said. “This can only occur once trust has been restored across countries and within countries, i.e. after growth has resumed, unemployment and inequalities have receded, and economies have sufficiently converged. What we are talking about is a new social contract among European countries.”

To contact the reporters on this story: Stefan Riecher in London at sriecher@bloomberg.net; Emma Charlton in London at echarlton1@bloomberg.net

To contact the editors responsible for this story: Craig Stirling at cstirling1@bloomberg.net Paul Gordon, Andrea Snyder

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.