Friday, 28 June 2013

Quote of the Day by Mario Draghi: "...Monetary Policy Cannot Create Real Economic Growth"

In his introductory remarks at the French AssemblĂ©e Nationale on Wednesday, ECB president Mario Draghi stated (my bold),
One pertinent example is the current shortage of credit for many households and small- and medium-sized enterprises. Credit provision requires funding, capital and a positive risk assessment. The central bank can help ensure funding and address macroeconomic risk. But it cannot provide capital, nor can it affect banks’ assessment of the creditworthiness of individual borrowers.
Similarly, monetary policy cannot create real economic growth. If growth is stalling because the economy is not producing enough or because firms have lost competitiveness, this is beyond the power of the central bank to fix.
Yet, the euro area needs sustainable growth. 
Good to hear a central banker actually acknowledging that monetary policy cannot create real economic growth.

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