BRUSSELS, July 15 -- The European Union's European Parliament issued the following news release:
The way out of debt is through growth, not spending; European Central Bank President Margo Draghi told Economic and Monetary Affairs Committee MEPs on Monday evening, in the first Monetary Dialogue session since the European elections. The ECB will support lending to the real economy and lower taxes provided they are accompanied by structural reforms and efforts to complete the EU single market, he added.
Mr Draghi opened his first meeting with the new Economic and Monetary Affairs Committee by outlining ECB plans to stimulate growth through Targeted Longer Term Refinancing Operations (TLTROs) offering very low fixed interest rates to banks that lend to non-financial instructions such as small businesses hardest hit by the crisis. This new instrument should make credit cheaper and more accessible to the real economy. Banks that fail to lend to the private sector will have to pay back what they borrowed.
MEPs' questions centred on return of the prosperity and job creation. They also stressed the need to tackle youth unemployment, through common action in the education and labour market fields. Mr Draghi agreed, noting that better-targeted education, labour market reforms and further harmonisation of financial markets are both necessary and can be achieved at relatively low cost.
MEPs also quizzed Mr Draghi about the slow progress of structural reform and low inflation. "Structural reforms are slow processes but we are seeing improvement" he replied, reiterating that these processes should be accompanied by growth-friendly fiscal consolidation, lower taxes and measures to complete the single market. Low inflation is caused, inter alia, by high unemployment and weak internal demand, but to tackle long periods of low inflation, unconventional measures can and will be deployed, he added.
Winding up the discussion, MEPs asked about future fiscal and monetary policy. Mr Draghi listed repairing the banking system to its full capacity, achieving fiscal and financial stability to retain confidence and avoiding financial bubbles as his priorities.
The next Monetary Dialogue session with Mario Draghi is planned for 22 September.
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