Draghi says over-regulation keeps Italian firms small-update

(ANSA) - Rome, March 26 - 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.