Draghi Urges Banks on Cleanup Even as Asset Check Crimps Lending

European Central Bank President Mario Draghi said banks should continue to deal with bad assets on their balance sheets even if this causes a temporary worsening of credit in the euro-area.

“It’s true that the short-term implications are there,” Draghi said at a press conference in Frankfurt today. “One has to counterbalance the short-term implications with the fact that the capital markets have reopened for banks. In the end, the scale is very much on the side of taking action.”