ECB's Mario Draghi warns of increased 'downside risks'

Mario Draghi said a commitment to the eurozone's fiscal rules was key to restoring confidence

Global Economy

Mario Draghi, president of the European Central Bank (ECB), has told the European Parliament that "downside risks" to the eurozone economic outlook have increased.

He also said that temporary measures by the ECB, such as buying up government debt, would be limited.
In doing so, he restated the bank's central role of controlling inflation.
Mr Draghi said a "fundamental restatement" of the region's fiscal rules was key to restoring confidence.

"What I believe our economic and monetary union needs is a new fiscal compact - a fundamental restatement of the fiscal rules together with the mutual fiscal commitments that euro area governments have made," the new ECB president said.
It was time to "adapt eurozone design with the requirements of monetary union", he added.
He also said the ECB was aware of the "continuing difficulties" for banks, particularly in raising capital.
Market reaction
On Wednesday, the central banks of some of world's biggest economies announced a plan to ease tensions within the global financial system by helping commercial banks.
The plan aims to make it easier and cheaper for banks to obtain US dollars. This should, the central banks hope, trickle down and make it easier for businesses and households to get access to finance.

Stock markets saw strong gains on Wednesday as a result of the plan, and were trading little-changed on Thursday.
This was despite figures showing weak growth in eurozone manufacturing, which fell at its fastest pace for two years in November, according to a closely-watched survey.
Markit's purchasing managers' index (PMI) of activity dropped to 46.4 last month, from 47.1 in October. A reading below 50 indicates contraction.
Also on Thursday, Spain held a bond auction and raised its target of 3.75bn euros ($5.1bn; £3.2bn), but was forced to pay higher interest rates to borrowers than in previous sales.
France held a similar auction but paid lower rates than in its last auction.