ECB primed to act after Brexit shock

Frankfurt / AFP

The European Central Bank is ready, willing and able to help put the eurozone economy back on its feet, if needed, even if financial markets have held up so far to the shock of the Brexit referendum, president Mario Draghi said on Thursday.
“If warranted to achieve its objective, the governing council will act by using all instruments within its mandate. I would stress our readiness, willingness, ability to do so,” Draghi said.
Nevertheless, the ECB opted to keep key interest rates unchanged at its policy meeting, despite the shock left by the British vote last month to quit the European Union.
Draghi said the markets had held up well so far to the shock decision.
“After the UK referendum, euro area financial markets have weathered the spike in uncertainty and volatility with encouraging resilience,” he said.
But it was still too early to gauge the full economic impact of the seismic vote, Draghi said.
“Over the coming months, when we have more information, we will be in a better position to reassess the underlying macroeconomic conditions, the likely paths of inflation and growth, and the risks around those paths,” Draghi said.

‘Eurozone banks face problem of weak
profitability’

Frankfurt / AFP

The main problem facing eurozone banks at the moment is weak profitability rather than solvency, European Central Bank chief Mario Draghi said on Thursday amid concerns that a new banking crisis could be brewing.
He also suggested that public money should be used to backstop the banks in “exceptional circumstances.”
“On the solvency side, our banks are better, if not much better than they were before,” Draghi told a regular news conference.
“The problem now that we will have to address is the weak profitability ahead, not a problem of solvency,” he said.