European Central Bank President Mario Draghi said on Tuesday that tough austerity measures across the eurozone were necessary if the currency bloc wanted to contain the debt crisis.
Speaking to European lawmakers in Brussels, Draghi said that the debt-hit members of the 17- member eurozone needed to press on with their economic reforms, warning that governments could not rely on the ECB to deal with the crisis.
Draghi said that while Greece had made progress in reforming its heavily indebted economy, it still needed to do more to bolster its fragile state finances. “We see progress, we see a need for further work,” he said.
“It’s too easy to think that the ECB can replace government action or lack of it, [by] printing money — that’s not going to happen,” Draghi said.
But the ECB chief also expressed concerns about the social impact of the cuts.
“I am well aware of the hardship that the current situation entails for many people, especially those whose job is lost or at risk,” he told members of European Parliament’s economic and monetary committee.
He said that governments imposing painful spending cuts should consider the social implications of their plans. Deep cuts have prompted violent protests in Spain, Greece and Portugal.
In his remarks, Draghi defended the ECB’s plans to launch a new government bond-buying plan, telling parliamentarians that the size of the programme would be “unlimited” and “adequate to reach its objectives.” Draghi acknowledged that although austerity was necessary to cut debt and deficit levels, it has dampened growth in some countries.
Draghi also called for the creation of a common bank bailout fund and rejected speculation that the creation of a new European bank supervisory body would place at risk Europe’s single market for the free movement of goods and capital in the region.
The ECB president said that membership of the new bank supervisory system should be open to all European member states and that it could eventually serve to underpin the single market.
He also faced a series of questions about the promotion of women to higher positions in the Frankfurt—based bank. The ECB’s governing council’s 23 members are all men.
“The financial crisis was handled by men and we need to change that,” Draghi told the committee.