ECB President Calls on Eurozone Nations to Cut Debt

0

ECB President Mario Draghi said he expects the region’s five-year-old economic recovery to continue, but noted a number of risks including rising trade protectionism, weaknesses in emerging markets, and financial-market volatility.

ECB President Mario Draghi said he expects the region’s five-year-old economic recovery to continue, but noted a number of risks including rising trade protectionism, weaknesses in emerging markets, and financial-market volatility.


Photo:

olivier hoslet/epa-efe/rex/Shutterstock

European Central Bank President Mario Draghi urged eurozone governments on Thursday to pay down their national debts to strengthen the currency bloc against potential economic shocks such as Brexit.

The warning comes amid a dispute between Italy’s government and the European Union over the nation’s planned budget deficit for next year, which the EU says is too high.

Speaking with lawmakers at Ireland’s Parliament, Mr. Draghi said he expects the region’s five-year-old economic recovery to continue, but noted a number of risks including rising trade protectionism, weaknesses in emerging markets, and financial-market volatility.

“Given the current buoyant economy, it’s time to rebuild fiscal [budgetary] buffers,” Mr. Draghi said. That’s the best way for governments to deal with possible overheating in certain asset markets and possibly Britain’s departure from the EU, he said.

Despite those economic risks, Mr. Draghi said the ECB expects to phase out its €2.5 trillion bond-buying program, known as quantitative easing, in December as planned.

“We are now at the point where we anticipate—subject to incoming data confirming our medium-term inflation outlook—that we will end net asset purchases at the end of the year,” he said.

Write to Tom Fairless at tom.fairless@wsj.com