mario draghi : hearing at the committee on economic and monetary affairs of the european parliament introductory statement by mr mario draghi, president of the european central bank, for the hearing at the committee on economic and monetary affairs of the european parliament, brussels, 23 september 2013. * * * madam chair, honourable members of the committee on economic and monetary affairs, it is a pleasure for me to be back with your committee, shortly after the important vote of your assembly on the ssm regulation. this vote has been preceded by intense interaction on the interinstitutional agreement on accountability and transparency, and i would like to thank president schulz, your committee and the negotiating team for the commitment to a successful establishment of the ssm. our two institutions share a common interest in a swift and effective implementation of banking union. the draft inter - institutional agreement ensures high standards of transparency and accountability, while safeguarding the protection of confidential information. we will continue working with a similar constructive spirit in the months ahead and hope that this will allow a swift set - up of the supervisory board. today, i will first review recent economic and monetary developments in the euro area. i will then address the two topics that you have selected for our discussion : the impact of our nonstandard measures ; and the new tasks of the ecb in the reformed emu architecture. economic and monetary developments since our meeting in july we have received positive data for the euro area economy. following six quarters of negative output growth, euro area real gdp rose by 0. 3 %, quarter on quarter, in the second quarter of 2013. measures of confidence and surveys of production have given some support to the view that euro area economic activity should continue its slow recovery in the current quarter, despite weak production data for july. looking forward, economic activity should benefit from a gradual improvement in domestic demand, supported by the ecb ’ s accommodative monetary policy stance and strengthening external demand for euro area exports. however, unemployment in the euro area remains far too high, and the recovery will need to be firmly established. annual euro area inflation declined to 1. 3 % in august 2013, down from 1. 6 % in july. underlying price pressures are expected to remain subdued, reflecting the broad - based weakness in aggregate demand and the modest pace of the recovery. medium to long - term inflation expectations continue to be firmly anchored in line with price stability. the risks to the outlook for price developments are expected to be still

for as long as needed, and at least until the end of the second quarter of 2014. the fixed rate in these special - term refinancing operations will be the same as the mro rate prevailing at the time. furthermore, we decided to conduct the three - month longer - term refinancing operations ( ltros ) to be allotted until the end of the second quarter of 2014 as fixed rate tender procedures with full allotment. the rates in these three - month operations will be fixed at the average rate of the mros over the life of the respective ltro. third, the governing council decided to start consultations with other european institutions on initiatives to promote a functioning market for asset - backed securities collateralised by loans to non - financial corporations. in the meantime, it is essential for governments to intensify the implementation of structural reforms at national level, building on progress made in fiscal consolidation and proceeding with bank recapitalisation where needed. furthermore, they should maintain the momentum towards a genuine economic and monetary union, including the swift implementation of the banking union. let me now explain our assessment in greater detail, starting with the economic analysis. real gdp contracted by 0. 6 % in the fourth quarter of 2012, following a decline of 0. 1 % in the third quarter. output has thus declined for five consecutive quarters. overall, labour market conditions remain weak. recent developments in short - term indicators, notably survey data, bis central bankers ’ speeches indicate that weak economic sentiment has extended into spring of this year. looking ahead, euro area export growth should benefit from a recovery in global demand and our monetary policy stance should contribute to support domestic demand. furthermore, the improvements in financial markets seen since last summer should work their way through to the real economy. at the same time, necessary balance sheet adjustments in the public and private sectors will continue to weigh on economic activity. overall, euro area economic activity should stabilise and recover gradually in the second half of the year. the risks surrounding the economic outlook for the euro area continue to be on the downside. they include the possibility of even weaker than expected domestic and global demand and slow or insufficient implementation of structural reforms in the euro area. these factors have the potential to dampen confidence and thereby delay the recovery. according to eurostat ’ s flash estimate, euro area annual hicp inflation was 1. 2 % in april 2013, down from 1. 7 % in march. this decline in the annual inflation