Draghi Says ‘Darkest Clouds’ Over Europe Have Subsided

“European Central Bank President Mario Draghi suggested the worst of the sovereign debt crisis may be over, saying the “darkest clouds’ over the euro area have lifted due to decisive policy steps last year.

“We can begin 2013 on a more confident note, precisely because significant progress was made during 2012,” Draghi said in a speech in Frankfurt late yesterday. “The darkest clouds over the euro area subsided. Europe’s leaders recognized that monetary union needs to be complemented by a financial union, a fiscal union, a genuine economic union and eventually a deeper political union.”

Draghi’s comments are the latest to indicate the ECB chief is increasingly confident that the three-year debt crisis has been contained and that the 17-nation currency bloc can emerge from recession later this year. He defended the ECB’s so-far untapped bond-purchase plan, which has calmed fears of a euro break-up on financial markets, saying it is fully in line with the central bank’s price-stability mandate and doesn’t threaten its independence.

“The ECB remains steadfastly committed to its primary mandate of ensuring price stability,” he said. “All of our measures are designed to achieve this goal. And looking at current and expected inflation rates, there is simply no evidence that could substantiate fears about any deviation from price stability.”

The euro was little changed after Draghi spoke. It fell 0.2 percent to $1.3292 at 9 a.m. inFrankfurt today.

Economic Recovery

While the ECB expects the euro-area economy to shrink 0.3 percent in 2013, Draghi said this month he expects a “gradual recovery” to begin later in the year….”

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