Mario Draghi, president of the
European Central Bank, said Thursday that over-regulation of
business in Italy forces firms to remain small.
That lowers productivity for the economy as a whole, he
said in comments to Italy's Lower House.
Reducing regulations could increase business size between
8% and 12%, he said.
Still, financial market confidence in Italy's fiscal
competence and its economic prospects has improved
significantly, shown by the narrowing interest-rate spread with
Germany, he added.
Draghi recalled the very difficult period in 2011 when the
spread between Italy's benchmark 10-year bond and its German
counterpart widened to about 500 basis points.
In comparison, the spread at midday Thursday stood at about
114 basis points, suggesting that investors no longer demand
very high interest rates in exchange for investing in Italy.
Structural reforms are important to encouraging ongoing
growth, as does efforts to help commercial banks reduce the
burden of bad loans.
The ECB "looks very favorably on initiatives to reduce the
weight of impaired (loans) on banks' balance sheets in order to
free up resources," to help businesses, said Draghi.
He said that ECB stress tests on major banks last year has
helped strengthen financial institutions.
He added that he sees "more favourable growth prospects"
for the eurozone.
Meanwhile, Draghi said that there is no shortage of bonds
available for purchase through the quantitative easing
program.
The ECB is aiming to buy 60 billion euros of bonds monthly
for 18 months to stimulate demand and inflation but some critics
have said they are concerned there won't be enough available
paper.
The appearance marked the first time in six years that
Draghi addressed the Italian Lower House, according to Bloomberg
news.
He last spoke to Parliament in 2009 when Draghi was still
head of the Italian central bank, Bank of Italy.
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