LEADERS of the eurozone must reform their economies to save the bloc from another explosive crisis, the chief of the European Central Bank (ECB) said today.
Mario Draghi urged euro leaders to make changes to labour markets, as the bloc’s economy continues to struggle with low growth and high unemployment.
The chief said ageing populations are a huge problem for the jobs market that will start to hack away at the eurozone’s potential in the coming years.
The European Central Bank is getting ready to announce details of the unprecedented programme of government bond-buying it hopes will lift the bloc out of recession and a vortex of falling prices.
Convening in Cyprus on Thursday, President Mario Draghi and his 25-member governing council will be signing-off on plans to purchase €60bn-a-month in government and private sector assets first announced in January.
The European economy is “on the brink of deflating” and urgently needs more stimulus, particularly from the continent’s largest economy Germany, former U.S Treasury secretary Larry Summers said on Tuesday.
Summers also said central bank bond buying, known as quantitative easing, would be welcome and certainly better than no action at all.
To get economy moving again, policymakers should go ahead with quantitative easing to boost liquidity and allow the euro to weaken
The euro zone’s “softly, softly” approach to the financial crisis is not working. The economy is sinking into deflation, dragged down by a zombie banking system and spiralling government debt. It is slipping back towards recession. A future break-up of the euro zone remains a potent threat.
Policymakers can ill afford to keep kicking the can down the road. The bailout earlier this month of Portuguese lender Banco Espirito Santo was a sharp reminder to investors the euro zone was not out of the woods by a long stretch. Continue reading