Mario Draghi, the soon to be ex-President of the European Central Bank, has insisted that the ECB can do more if needed to support the global economy. However, he also called on euro-area governments to help support any effort with increases in fiscal spending as well as committing to closer fiscal ties. In an interview with the Financial Times Draghi stated ‘Given the inherent weakness of national states in a globalised world, what matters is to make the union stronger. We need a common euro-zone budget’.
As Draghi nears the end of his time with the ECB, he has called on governments within the EU to increase spending as he believes doing so ‘could greatly help’ the banks ongoing task. He added that the current stimulus probably would be less effective, but would also have to last a long time if there was ‘no support from fiscal policy’.
Draghi also believes that unless the EU has a closer fiscal union, it will continue to have a ‘fragile construction’. Given the inherent weakness of national states in a globalised world, what matters is to make the union stronger. In some areas, further integration achieves this goal’ Draghi said, adding ‘We need a common euro-zone budget. Clearly the political debate on that still has a long way to go. But I am optimistic’.
And from one person at the end of his tenure, to another at the start. Last week Kristalina Georgieva, a Bulgarian economist, was confirmed as the managing director of the International Monetary Fund. Georgieva is the first person from an emerging-market economy to head the IMF and immediately issued a warning. At her confirmation she cautioned ‘"Warning signs are flashing, and we must be ready to be tested’ whilst adding that her priority would be to help the bank’s 189 member countries minimize risks plus being attentive to all members ‘big or small’.