22 January 2013

ECB/Draghi: The most urgent project – financial union – is now taking tangible shape

I would like to suggest three things we need to focus on in 2013:

First of all, we need perseverance. Despite the good progress so far showing that adjustment is happening, reform efforts need to be sustained. Adjustment is inherently difficult and will remain with us for some time to come. Politicians and their populations will need to persevere, especially on structural reforms that improve competitiveness. Countries need competitiveness to sustain growth. They must move away from debt-financing. There is no possibility of sustained growth based on permanent debt accumulation; and by the way, there is no social fairness based on permanent debt accumulation.

Second, we need continued ambition. 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. After the many advances that have been made in creating new rules and institutions, this coming year should focus on implementation.

Third, we need patience. I am very well aware that for many people in the countries under adjustment, the personal economic situation can be very difficult. But there is simply no alternative to the path of reform.

The crisis has several facets that are of different importance in different countries: there is a debt crisis that needs fiscal consolidation; there is a competitiveness crisis that needs structural reforms; there is a banking crisis that needs a strong financial union; and there is a confidence crisis that needs strong commitment by all policy-makers, including by the central bank expressed through our programme of OMTs.

Later this year, once the legal texts have been adopted, the ECB will assume a major new responsibility to prepare for becoming the new euro area banking supervisor, as home and heart of the single supervisory mechanism. This will be a major organisational challenge. Internal work is already underway. You can rest assured that we will work hard to ensure that the ECB will deliver on its responsibilities to the highest possible standard.

Full speech

© ECB - European Central Bank