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ECB president: Fiscal Compact not ‘quid pro quo’ for deal on bank debts

But Mario Draghi says Ireland’s vote is a welcome affirmation of its priorities, and that market access could be close at hand.

Image: Yves Logghe/AP

THE PRESIDENT of the European Central Bank has indicated that the result of Ireland’s referendum on the Fiscal Compact was not intended as a bargaining chip for securing a deal on its banking debts.

Speaking to reporters after the bank’s governing council met in Frankfurt, Mario Draghi said he did not believe there was “any ground or statement for a quid pro quo” linking ratification of the deal to an arrangement allowing Ireland to restructure its banking debts.

“I think decisions ought to be taken for that they are,” Draghi said, “and that’s what we see”.

He added that the result of the referendum showed that “the Irish people consider fiscal consolidation, and fiscal stability, a basic pillar for growth and for further European integration”.

“It’s really a testimony of their responsibility, and for this they should be complemented.”

Later asked about the European Commission’s forecast for Ireland’s economic growth, Draghi commented that Ireland had already made “substantial” progress in both its fiscal consolidation and in restructuring its banking sector.

“We already see the signs,” the Italian said. “You see spreads going down for Ireland, probably much more than any other country.

“If one says that Ireland continues in these efforts, the return to market access is not a far distant perspective. It could actually be much closer than we all expected until, I would say, nine months ago.”

The meeting of the bank’s board of governors had earlier decided to leave the ECB’s main interest rates unchanged at its monthly meeting in Frankfurt – though the decision was not unanimous.

It had been speculated that the bank may have cut its rates by 0.25 per cent in order to stimulate economic activity within the eurozone.

Draghi had earlier said economic growth in the eurozone remained “weak” with “increased downside risk”, and called on EU leaders to consider their policies towards fiscal integration – hinting that the bank was not willing to take major policy decisions ahead of the meeting of the European Council in three weeks’ time.

To further underline this point, he argued that the ECB now stood “ready to act” when it was appropriate to do so.

About the author:

Gavan Reilly

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