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Draghi says it's up to governments

posted 25 Sep 2012, 09:27 by Mpelembe Admin   [ updated 25 Sep 2012, 09:27 ]

German Chancellor Angela Merkel holds private talks with ECB chief Mario Draghi as speculation swirls and pressure mounts over the next steps for addressing the euro zone's sovereign debt crisis.

EUROPE-DEBT CRISIS - Addressing industry leaders in Berlin, it was business as usual for German Chancellor Angela Merkel.

She reiterated her tough stance on tighter budget discipline as a way out of the euro zone debt crisis.


GERMAN CHANCELLOR, ANGELA MERKEL, SAID:

"There is a lack of confidence on financial markets that some euro zone states can pay back their debts in the long term. The world wonders how competitive euro zone countries are. We in Europe need to ask ourselves how we can regain lost trust. Too often, promises have been made in Europe which in the end were not kept."


But as she met behind closed doors with ECB chief Mario Draghi, pressure mounted for policymakers to act.


Spain's need for financial help and Greece's failings to reach its targets were likely top of the agenda.

Addressing the same conference, Draghi was upbeat about the situation.


PRESIDENT OF THE EUROPEAN CENTRAL BANK, MARIO DRAGHI, SAID:

"Provided all policymakers persevere with the necessary reforms, we have a number of reasons to be positive about where the euro area is heading. We have seen signs of improved sentiment in financial markets, and we expect the economy to return to growth next year.


But BNY Mellon's Simon Derrick says investors have cause for concern.


SIMON DERRICK, HEAD OF GLOBAL CURRENCY RESEARCH AT BNY MELLON SAID:

"We have still the same log-jam in policy within the euro zone as we've had over the past two and a half years and certainly now we are coming down to the crux of things with Greece, and a bailout for the fourth largest economy Spain. So yes I do think they should start to become upset by the inability of euro zone politicians to deal with matters.


There've been more protests in Spain, and more bad news for Draghi's master plan.

A German tabloid reported that lawyers are now investigating the legality of the ECB's bond-buying programme.


The news pushed up Spanish and Italian yields, the very borrowing costs the scheme wants to lower.


Ciara Sutton, Reuters

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