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Lecture by Mario Draghi, President of the ECB,
at Sciences Po,
Paris, 25 March 2014

The euro area has been through a crisis of almost unprecedented drama and severity. Like the Great Depression of the 1930s, this will most likely provide rich material for economic historians for decades to come. It will be studied and analysed, its causes and consequences debated and revised. So it is interesting for us to imagine, when the dust has settled, where the various accounts of the euro area debt crisis will locate its turning point.

Some historians may locate it in individual policy measures taken during the crisis; others may place it in a future that we have not yet reached. In my view, the turning point has passed, and it came in the summer of 2012. What changed at that point was that crisis management shifted towards the development and execution of a consistent recovery strategy. It is this strategy that I am going to outline in my remarks today.

I will organise my remarks as follows. First, I will describe the initial development of the crisis, illustrating how policy choices made under the pressure of events and that were commendable by themselves, but that were sequenced in the wrong order, made dealing with the consequences of the debt overhang more difficult. This interacted with features of the euro area’s institutional structure to postpone the recovery.

Thereafter, I will describe how the right sequence of steps after June 2012, when the banking union project was first agreed, has put the euro area back on a trajectory towards recovery. The first step was ‘rebooting’ the financial system, which is a necessary condition of a sustained recovery, not least because it helps monetary policy to manage aggregate demand. But it is not a sufficient condition: policies of structural reform that lift the level of potential growth are an equally important part of the recovery strategy.

In describing this strategy, I am not only talking about the past, but also about the present and the future. The crisis is not over. To be successful, the recovery strategy is being, and must continue to be, executed with commitment and perseverance.

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Speech by Mario Draghi, President of the ECB, 
at the Katholische Akademie in Bayern,
Munich, 27 February 2013

Excellencies,

Ladies and Gentlemen,

I am delighted to be here in Munich at the Catholic Academy and thank you for this kind invitation. As befits this setting, I would like to begin my remarks by noting the momentous nature of the current period for the Catholic Church, on the eve of the last day of the pontificate of Benedict XVI.

Pope Benedict, a great son of Bavaria, used his eight years at the helm of the Church to address a variety of pressing concerns of the modern world. Among them was an emphasis on ethical concerns in the economic relationships of our globalised world.

Those concerns have become more relevant than ever during the economic and financial crisis that now extends into its fifth year.

The crisis has dented people’s confidence in the capacity of markets to generate prosperity for all. It has strained Europe’s social model. Alongside the accumulation of staggering wealth by some, there is widespread economic hardship. Entire countries have been suffering from the consequences of misguided past actions – but also from market forces that are sometimes beyond their control.

In a sense, the “social question” of the 19th century, which inspired the Catholic Social Doctrine, has re-emerged – but today it transcends national borders: what is the right framework for reconciling free enterprise and individual profit motives with concerns for the common good and solidarity with the weak?

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Speech by Mario Draghi, President of the ECB,
at Wirtschaftstag 2012 “Kapitalismus in der Krise? Die Zukunft der Marktwirtschaft” der Volksbanken Raiffeisenbanken organised by Genossenschaftsverband e.V.,
Frankfurt am Main, 7 November 2012

Sehr geehrte Damen und Herren, 
Es ist mir eine große Freude, heute hier bei Ihnen zu sein.

I am very pleased to have the opportunity to speak to you today. Small- and medium-sized enterprises – and the banks that finance them – are the backbone of the German economy. Your continued success is vitally important – not only for Germany, but also as a key driver of growth and employment in the euro area as a whole.

For this reason, you are a very important constituency for the European Central Bank (ECB). We pay close attention to your experiences and your views of the future. For example, through surveys that we conduct twice a year, we are able to gather valuable information on the access to finance of smaller companies in the euro area.

The most recent survey was released only last Friday and relates to the period from April to September 2012. It contains information from about 7,000 small and medium-size firms throughout the euro area, of which around 1,000 are from Germany.

The findings are encouraging for firms in Germany. Banks remain willing to provide them with loans. But the situation for SMEs in the euro area overall is more difficult. Many are reporting a deteriorating financing situation. The availability of bank loans for SMEs across countries has become increasingly divergent.

These developments reflect the fact that the economic and financial situation in the euro area remains challenging. I would like to use my address today to discuss that situation and to share with you the ECB’s views. I will focus on two themes in particular.

My first theme will be the important steps being taken by governments to put the euro area on the path back to stability. Individually, they are addressing their deep-rooted economic challenges. Collectively, they are working to strengthen the foundations of the euro area.

My second theme will be the measures taken by the ECB to maintain price stability and to remove unfounded fears about the euro area. These measures are essential to ensure that our low interest rates are passed through to the real economy.

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