Time for more integration: ECB chief Draghi

Written by Agencies | Frankfurt | Updated: Jun 22 2014, 04:07am hrs
European Central Bank (ECB) president Mario Draghi says current rules limiting European Union member states budgetary policiesnotably deficit spendingare not sufficient, and states should surrender some sovereignty in some economic policy areas, notably labour laws.

In an interview with Dutch newspaper De Telegraaf published on Saturday, Draghi said economic policy cannot be a purely national matter because of the impact European countries policies have on each other.

Meanwhile, Draghi said large-scale asset purchases are part of the central banks toolkit, but for now it would focus on its latest set of stimulus measures. Draghi told De Telegraaf that the euro zone recovery was still weak, uneven and vulnerable and that interest rates would stay low over a longer period.

Asked what needed to happen before the ECB would start buying assets to give banks more money to lend, also known as quantitative easing (QE), Draghi said that would be the answer to a deterioration of inflation expectations over the medium term. At the moment, however, we are focusing on the measures announced on June 5, Draghi was quoted as saying.

The ECBs target for medium-term inflation is below, but close to 2%, a far cry from the current level of 0.5%, which has sparked concern the euro zone could enter a Japan-style deflationary spiral of falling prices, slowing growth and waning consumption and investments.