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Mario Draghi to governments: “Only good debt can save the economy”

The former president of the European Central Bank has spoken for the first time since his departure. In his remarks, Mario Draghi advised governments to use the money they have deployed in the coronavirus pandemic to improve their economies or face the risk of a new debt crisis.

“European institutions, savers and financial markets will only finance ‘good debt’ if it is used to invest in human capital, critical infrastructure or research,” he said Tuesday at a convention Catholic in Rimini, Italy.

One recently appointed to a Vatican body which advises Pope Francis on social and economic affairs insisted that “low interest rates are not in themselves a guarantee of sustainability.”

Draghi’s comments come as governments around the world – concerned about rising debt burdens – debate whether to expand support for the crisis. They are trying to find a balance between preventing mass unemployment that could cause lasting damage and restructuring their economies for the post-pandemic world.

“If the debt is used for unproductive purposes, it will be considered bad and its viability will be eroded”, explained the former president of the ECB.

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