ECB's Draghi: Darkest Clouds Over Euro Zone Have Passed

Mario Draghi
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Mario Draghi

The euro zone can begin 2013 with more confidence than last year but it is up to governments to carry the bloc forward with reforms while the European Central Bank delivers stable prices, ECB President Mario Draghi said on Tuesday.

Draghi's pledge in July last year to do "whatever it takes" to preserve the euro and his follow-up plan for a new ECB bond-purchase program helped bring the euro zone back from the brink of break-up.

In a new year's speech, the central bank chief highlighted the impact the bond plan - dubbed Outright Monetary Transactions (OMT) - has had on easing tensions but put the onus on governments to press ahead with reforms to retain confidence in the bloc.

The commitment shown by policymakers in the 17-country bloc last year to securing a stable euro meant that "the darkest clouds over the euro area subsided" in 2012, Draghi said.

"We begin 2013 with more confidence than we had in January one year ago," the Italian told the Frankfurt Chambers of Commerce in his speech, adding quickly that the ECB was focusing on its core task of delivering stable prices.

"This confidence is to a large extent built on the progress that all of us -governments, parliaments, the EU and the ECB - have been able to make during 2012," he said. "But it is also crucially built on the expectation that progress will persist."

"The ECB for its part will be there to continue, as it has done successfully now for 14 years, to safeguard price stability," he said, adding that there were no signs of the central bank deviating from delivering stable prices.

The ECB had shown its commitment to doing what is necessary - within its mandate - to safeguard the stability of the euro, Draghi said, adding: "Only a currency whose future existence is not in doubt can be a stable currency."

Draghi acknowledged that the reform paths many euro zone countries are pursuing is difficult.

"But there is simply no alternative to the path of reform," he said. "Despite the good progress so far showing that adjustment is happening, reform efforts need to be sustained ... Countries need competitiveness to sustain growth."

Governments should not ease off their reform drive, he said: "Relative calm in financial markets should not lead to a lowering of our ambitions to fix the structural flaws in the governance framework of the euro area."

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