September 25, 2018

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ECB’s Mario Draghi Will Urge Governments To Speed Up Financial Reforms



The Brexit fallout will be causing a lot of economic uncertainty in the United Kingdom and the Eurozone. ECB President Mario Draghi will likely ask governments to boost the eurozone’s economy in the coming weeks. Most financial experts saw this decision coming from miles away. For the umpteenth time, it appears as if a helicopter money bailout is on the horizon.

Draghi Under Pressure To Come Up With a Solution

For quite some time now, international central banks have been relying on an ultra-easy monetary policy. Even though they knew all too well that situation would not last forever, they put little effort into coming up with a different plan of action. Now that this monetary policy has hit the glass ceiling, they turn towards governments for a semi-bailout.

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Albeit it is not expected the ECB will change its own monetary stance on Thursday, governments will be asked to spend more money wherever possible. Doing so should, in theory, speed up reforms of the financial sector. Unfortunately, those calls will likely fall on deaf ears again, as Germany has no intention to give up its fiscal surplus right now. Moreover, they are not interested in pooling more money at the European level unless they gain more power.

Assuming there will be no attempt to comply with Draghi’s suggestions, the outcome of the Brexit will fall on the shoulders of the ECB. But even Mario Draghi has to admit there are few options left on the table to deal with this looming recession. More helicopter money is always an option, albeit it becomes far less effective every time it is used.

The looming Italian banking crisis is not helping matters either at this stage. Draghi is not expected to take any drastic measures until September 8 when the new inflation projections will be presented. However, it seems to be only a matter of time until Draghi and the ECB change their monetary policy, as the current course of action is not yielding any positive results.

Probably No Impact on Bitcoin Whatsoever

Cryptocurrency enthusiasts may expect these issues to impact the Bitcoin price at some point. It is unlikely this will happen in the short-term, as neither the Brexit nor the Italian banking crisis seems to be affecting Bitcoin. Then again, cryptocurrency works beyond the reach of traditional finance, so that outcome is not entirely unexpected. At the same time, there is an argument to be made as to how these issues do not affect Bitcoin in a negative way either.

Source: Reuters

Header image courtesy of Shutterstock



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