2/13, 1:44 PM (Source: TeleTrader)
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Draghi: ECB supports Eurozone budget initiative

European Central Bank President Mario Draghi expressed the belief that fiscal integration in the euro area would be strengthened with a "budgetary instrument... if appropriately designed." On Wednesday, the ECB published his reply to Auke Zijlstra, member of the European Parliament from the Netherlands, in which the chief policymaker says the initiative could bring about an improvement in "economic resilience" of member states as well as the monetary union.

"From a central banking perspective, this type of instrument would be particularly welcome if it provided effective macroeconomic stabilization, especially in the presence of deep euro area–wide recessions. Rather than creating conflicts of interest between policy areas, in this type of situation a fiscal capacity of this nature could support the single monetary policy in stabilizing the economy and thus promote price stability," he stated in the letter dated yesterday.

The budget must introduce "strong incentives for sound fiscal and economic policy making" for individual countries, the central banker added.

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