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Draghi opts for more of the same as another crisis looms - Carthy

26 September, 2016

Sinn Féin MEP Matt Carthy questioned President of the European Central Bank Mario Draghi today in the monetary dialogue in Brussels.

Mr Carthy, a member of the Economic and Monetary Affairs Committee, commented: “This dialogue is taking place in the aftermath of the Brexit vote, a development which will cause serious economic problems in the North of Ireland if it is forced – against the will of the people – to leave the European customs union.

“Since the Brexit vote we’ve seen the Commission’s highly political decision to avoid punishing Portugal and Spain under the Stability and Growth Pact. This should be the beginning of the end for the SGP straitjacket, and good riddance.

“Now we hear that the ECB intends to establish a ‘Task force for economic reform’ to push structural reform – reforms that have so far only had a deflationary impact and caused an increase in poverty."

Mr Carthy questioned the ECB President: “What mandate do you have to create such a body, and what is its agenda? And what are the implications of the ECJ’s ruling last week that citizens affected by austerity can sue the ECB and the other Troika institutions if they believe their fundamental rights have been violated?”

Speaking on the possibility of another financial crisis developing, Carthy said: “We see a looming crisis in the Italian banking sector, and just this morning news emerged that Deutsche Bank’s shares have fallen to a new low. The IMF has said Deutsche Bank is the biggest risk to the global financial system due to is inter-connectedness with international banks. 

“In anticipation of the next crisis arising from these banks, making payments directly to households may increase economic resilience and demand in the Eurozone.

“We know the ECB’s stimulus measures are not working. The Quantitative Easing programme has failed to meet its goals of higher levels of inflation in the Eurozone so I welcome the fact that the ECB this month decided against extending the programme. We need to make direct payments to households and invest in public infrastructure ather than subsidising banks and corporations. When will this proposal, sometimes called 'helicopter money' – which has the support of many leading economists – finally be examined seriously by the ECB?”

Following the hearing, Mr Carthy commented: “Mr Draghi continues to bury his head in the sand on the many and varied crises developing in the eurozone. As usual he failed to meaningfully engage with questions from MEPs about the need for a comprehensive public investment programme, and his comments that the upheaval caused by a Brexit has been 'contained' is an entirely inadequate response for the leader of the ECB."


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