ECB ‘obliged' to introduce OMT to defend price stability, Draghi tells Bundesbank

European Central Bank (ECB) president Mario Draghi, speaking at a conference organised by the Deutsche Bundesbank in Frankfurt, yesterday emphasised that eurozone governments have improved their fiscal positions despite recessionary headwinds and stressed euro area countries have become more competitive.

He said the architecture of European Monetary Union "has been strengthened in ways that many would have considered inconceivable two years ago", and added that the move towards banking union is crucial, not only for the functioning of the financial system, but also for the conduct of monetary policy.

Moving to defend the policy of Outright Monetary Transactions, which has yet to be used by the ECB but has faced a legal challenge from the Bundesbank, Draghi said the policy "builds on an established monetary policy doctrine that has gained prominence not least through its successful adherence by the Bundesbank for several decades. Namely that the central bank should be endowed with a clear price stability mandate and, within this mandate, should be allowed – in fact obliged – to use its instruments in full independence to deliver price stability".