EUROPE’S finance chief has urged the continent’s politicians to deal with Italy's potentially explosive banks, which are threatening to derail the eurozone dream.
Mario Draghi has called on politicians to fix eurozone problems
Mario Draghi, president of the European Central Bank promised he would use every available avenue to deal with economic risks, which have increased following Britain's vote to leave European Union.
However, the bank’s chief was at pains to point out that monetary policy from the ECB can not cure all the problems blighting the eurozone.
Draghi confirmed the outlook for growth had worsened following the Brexit vote.
Italy's banks are holding billions of pounds worth of bad loans
He said the ECB would "monitor developments very closely" to use "all the instruments available within its mandate" in response to risks and economic uncertainties.
But the chief also highlighted Brexit was just one of many headwinds facing the eurozone's economy, on top of unemployment and other political uncertainties.
He has now called on eurozone governments to address the bad loans weighing down Italy's banks and put in place "growth-friendly" policies.
Since the UK's vote for Brexit, fears have increased over the solvency of Italian banks, which hold a huge £270billion of non-performing debt.
Draghi said today: “The longer we have this in place, the less functioning will be the banking sector - and less effective the banks will be at transmitting our monetary policy.”
The bank president today said monetary policy can be be supportive of other policies that are needed.
Draghi's comments come amid fears the ECB is running out of tools to ward off economic meltdown within the bloc.
The bank today kept eurozone interest rates on hold at record lows of minus 0.4 per cent for deposit and zero per cent for refinancing.
Draghi said over the coming months the ECB will be in a better position to access growth prospects following Britain's vote to leave the EU.
But he stressed the outlook rested on the outcome and duration of exit negotiations.
http://www.express.co.uk/finance/city/691929/ECB-draghi-calls-for-action-on-Italy-s-banks-and-low-growth-as-interest-rates-held
