Xavier Puig appreciated Draghi’s announcement and trusts that “now the money will reach people and businesses”
Xavier Puig, program director for Banking and Finance at Barcelona School of Management, made a very positive appraisal of the announcement made by the president of the European Central Bank (ECB), Mario Draghi, to make two liquidity injections in the long term amounting to 400,000 million euros, on the condition that banks open up lending to businesses and homes. “Up until now people heard that money was easy to access but when they went to the banks, it wasn’t easy at all because it was only available for financial markets, that is, the banks, so it never filtered through to the people. The idea of the measure proposed by Draghi is that this money is made available to businesses and families because it will only be provided to banks if they can prove that the finance is set aside for people and banks, and in addition to this, there will be control measure to ensure that this happens”, stated Xavier Puig in an interview for Catalunya Television.
Without doubt, for Puig this is the best news that the European Central Bank could have given. “The philosophy behind the proposal is good, but it remains to be seen how this will be applied.”
Previously, the ECB decided to reduce key interest rates by 10 basis points, to a historic minimum of 0.15%. Draghi announced that the ECB key interest rates will remain at current levels for the foreseeable future given the risk of inflation. This, for Puig however, won’t make much difference. “We can’t wait for the euro to lower in order to be more competitive than the dollar. I personally believe that the currency needs be strong and that Draghi shouldn’t have to do everything. We need to ensure that our products are competitive regardless of the price of the euro. Nevertheless, Puig predicts that the euro will start to drop once the United States starts to increase interest rates.