Euro Still Fighting

With Greece and Spain still facing economic problems, the 17 countries in the Eurozone still face financial uncertainty.

According to some analysts, it is possible that the euro will ‘explode.’ Mario Draghi, however, insisted the euro is not in any danger of losing its value. The European Central Bank (ECB) head firmly believes that the political will of the heads of the countries and the citizens of Europe will keep the union intact.

In an attempt to help the banks, European ministers have signed most recently a rescue package amounting to 100 billion euros.

The ECB further cut the benchmark interest rate to 0.75 per cent. It already has given three-year emergency loans twice.

Another possible avenue to help the ailing banks is to reactivate the government bond-buying programs but the ECB seems to have other plans.

In an interview with Le Monde, Draghi clarifies that the objective of the ECB is not to solve the financial troubles of the countries but to fight inflation.

Maintaining the price stability is the ECB’s foremost concern and Draghi has disclosed that interest rates were cut in July because the target level of two percent seems to be just within reach.

In fact, by the end of 2012, Draghi explains the inflation will go down. If there are risks in deflation, the ECB will act on it as well.

Draghi is hopeful that the despite the worsening eurozone economy, improvements will be seen by the start of 2013.