AMSTERDAM – The president of the European Central Bank on Monday put pressure on governments to push ahead with plans for a closer European integration to address the crisis' core problems.
Speaking to university students in Amsterdam, Mario Draghi said that the euro zone's economic problems still loomed large and that calls for more action were understandable. But he also stressed the ECB's operational limits.
"Let me be clear: undertaking structural reforms, budget consolidation and restoring bank balance sheet health is neither the responsibility nor the mandate of monetary policy," he said in the speech text.
The ECB could not substitute for actions that other actors, including the private sector, had to take, the Italian said.
Although there was a decrease in fragmentation on the funding side, the ECB's very accommodative monetary policy was only partly passed on to the financing conditions faced by firms and households in some euro area countries, Draghi said.
Small and medium-sized companies, the backbone of the euro zone economy, are particularly hard hit by this development and the ECB is studying options to address this issue, but it has made clear that governments and others must also act.
Draghi said that progress was underway for deeper integration in banking, fiscal, economic and political sectors, saying but efforts should not stall.
Germany dealt a blow to plans for a banking union at an informal meeting of European finance ministers last week, saying the project would require changes to EU law.
The Single Supervisory Mechanism (SSM) for banks under the roof of the ECB marks the first step to such a union, which also foresee a single mechanism to wind down banks, a resolution fund and possibly a single deposit guarantee scheme.
"I would like to stress the importance of quickly complementing the SSM with a Single Resolution Mechanism," Draghi said. "This is necessary to guarantee timely and impartial decision-making, particularly in the cases where cross-border resolution is required."
"What's more, a Single Resolution Mechanism is essential to ensure that the SSM's supervisory decisions for resolution can be followed up with action, without reinforcing the vicious link between banks and sovereigns," Draghi said.
(Reporting By Paul Carrel, Writing By Eva Kuehnen)