measures are directly targeted to enhance competitiveness and job creation. others foresee a radical fiscal consolidation. the two are very complementary to ensure a return to growth after the unavoidable contraction in economic activity. wsj : but some people say greece is really suffering depression - like conditions, gdp off 15 % or 16 % peak to trough. what is your view of these austerity policies in the larger strategy right now, forcing austerity at all costs in order to bring the budget deficits down? draghi : this is actually a general question about europe. is there an alternative to fiscal consolidation? in our institutional set up the levels of debt - to - gdp ratios were excessive. there was no alternative to fiscal consolidation, and we should not deny that this is contractionary in the short term. in the future there will be the so - called confidence channel, which will reactivate growth ; but it ’ s not something that happens immediately, and that ’ s why structural reforms are so important, because the short - term contraction will be succeeded by long - term sustainable growth only if these reforms are in place. bis central bankers ’ speeches wsj : austerity means different things, what ’ s good and what ’ s bad austerity? draghi : in the european context tax rates are high and government expenditure is focused on current expenditure. a “ good ” consolidation is one where taxes are lower and the lower government expenditure is on infrastructures and other investments. wsj : bad austerity? draghi : the bad consolidation is actually the easier one to get, because one could produce good numbers by raising taxes and cutting capital expenditure, which is much easier to do than cutting current expenditure. that ’ s the easy way in a sense, but it ’ s not a good way. it depresses potential growth. wsj : which do you think are the most important structural reforms? draghi : in europe first is the product and services markets reform. and the second is the labour market reform which takes different shapes in different countries. in some of them one has to make labour markets more flexible and also fairer than they are today. in these countries there is a dual labour market : highly flexible for the young part of the population where labour contracts are three - month, six - month contracts that may be renewed for years. the same labour market is highly inflexible for the protected part of the population where salaries follow seniority

so certainly the new part of this job is the inner machinery of the ecb. but the monetary policy decisions and the related decisions were part of my knowledge even before, because we shared decisions that were taken in the past. wsj : your first months saw a lot of activity. is there much more the ecb can do when it comes to financial stability and economic growth? has it done about as much as it can? draghi : what i am going to say doesn ’ t imply anything as far as future monetary policy decisions are concerned. within its primary mandate the ecb will do its utmost to ensure price stability in the medium term and within the remit of the treaty to foster financial stability. wsj : what ’ s the first statistic you look at in the morning? draghi : stock markets. wsj : do you look at the euro exchange rate? draghi : not in the early morning. bis central bankers ’ speeches