‘For countries that are part of the single market and that also share a single currency, as in the euro area, it is clear that a fully integrated banking and capital market and a higher degree of institutional integration to protect that market is of great importance’ – Mario Draghi, ECB President
Those who waited the European Central Bank President to shed some light on the possibility of more monetary easing in the Euro zone, were left disappointed. Analysts and economist were anticipating some major moves in the Euro after Mario Draghi’s speech at the Bank of England open forum presentation, as expectations were raised in October when Draghi suggested a major policy move. Instead ECB President took the opportunity to speak about the integration required in European institutions. The key message of Draghi’s speech was to urge leaders to implement a banking union across the currency bloc, including a single deposit insurance scheme to protect savers when a bank collapse. However, this topic has been considered as increasingly controversial in Berlin.
At the ECB’s October meeting, Draghi convincingly signalled the possibility of more quantitative easing, sending the Euro to a two-month low against the US Dollar. Also, Draghi spoke about the possibility of negative deposit rates and more asset purchases. However, it still remains unclear, whether the ECB will extend its current 1 trillion euro asset purchase programme beyond next September, or ramp it higher by increasing the monthly amount it purchases.