Frankfurt: European Central Bank president Mario Draghi acknowledged that Greece could leave the euro area and signalled policymakers won’t compromise on their key principles to prevent an exit.
“While the bank’s strong preference is that Greece stays in the euro area, the ECB will continue to comply with the mandate of keeping price stability over the medium term in line with treaty provisions and preserving the integrity of our balance sheet,” Draghi said in a speech in Frankfurt on Wednesday. “Since the euro’s founding treaty does not envisage a member state leaving the monetary union, this is not a matter for the governing council to decide,” Draghi said.
The comments are the closest Draghi has come to conceding that Greece could choose to leave the euro region, having previously said only that such an event wasn’t envisaged and wouldn’t help Greece. Greece faces a fresh election on 17 June that may boost parties opposed to the conditions of its international bailouts, raising the specter of its exit.
Stern words: Mario Draghi. Photo: Daniel Roland/AFP
The governing council’s strong preference is that Greece will continue to stay in the euro area, Draghi said.
He said euro-area countries have made more progress on cutting budget deficits and introducing structural reforms than has been acknowledged.
“Everywhere governments have undertaken significant and difficult reforms and continue to do so,” Draghi said, adding that public debt overall in the euro area should stop rising next year and decline thereafter.
Draghi said the ECB’s non-standard measures, through which more than €1 trillion euros has been pumped into the financial system since December, had helped to stabilize short-term rates in an environment of high volatility and extreme distrust.