Ten month on from his “whatever it takes” to save the euro speech, the head of the European Central Bank has told a gathering of bankers in the City of London that the eurozone is more stable than a year ago – though economic conditions remain challenging – and the risks of a euro collapse have now largely been removed:
Mario Draghi told participants at a function in the UK’s financial centre: “Last summer, speaking here in London, I said that when people talk about the fragility of the euro, they underestimate the amount of political capital that is being invested it.”
He added: “Today we are seeing some encouraging signs of tangible improvements in financial conditions.”
Draghi defended the ECB’s aggressive loosening of monetary policy saying that gave “breathing space” from panicked markets driving up country’s borrowing costs to inappropriately high levels, which would have made default “a self-fulfilling prophecy”.
He also called for more European integration – saying Britain should be a part of that.
“The answer to the crisis has not been less Europe but more Europe,” Draghi said in a text of his speech on ‘Building stability and sustained prosperity in Europe’.
In a rare sortie into politics beyond the eurozone, Draghi also urged Britain to strengthen its ties with other European Union members, saying: “Europe needs a more European UK as much as the UK needs a more British Europe.”
The ECB head said governments must push on with reforms, that European countries – including Britain – should strengthen their ties and flesh out plans for closer integration, including a banking union, even though that would mean them losing some national control over budget and structural policies, something which the UK is particularly opposed to.