Deposits have begun returning to banks in the most troubled nations, Draghi said, while capital flight is reversing and stock markets are rising. A closely watched measure of payments owed among the region’s central banks has been falling, a sign that money in the euro zone is starting to stay put rather than flee for the most stable nations.
On Thursday, the ECB left its key interest rate unchanged, reflecting an increasing sense that the acute phase of the crisis has passed and that the risk of a euro-zone breakup has greatly diminished from last year.
“Look at the overall landscape,” Draghi said. “Over the last six months, you see a significant improvement in financial market conditions.”
Greece also reported positive financial news Thursday. Officials said the government in 2012 slightly exceeded its deficit target.
The rates Spain got in its Thursday auction of 10-year bonds are the best since early 2012, according to a dispatch from the El Pais newspaper. The positive showing points to easing tensions within the euro zone and new confidence in the nation’s efforts to trim deficits, boost exports and court international investment.
Likewise, Ireland has steadily regained its footing in international markets and last year became the first of the euro zone’s bailed-out nations to sell longer-term bonds. The Irish sale of about $3 billion in four-year bonds this week attracted requests for as much as $9 billion, indicating that investors trust they will be repaid.
Although financial fears are easing, Draghi said, the 17-nation currency union has not yet entered an economic recovery. The ECB forecasts that the euro zone will likely remain in recession until late this year. Greece and Spain face crushing unemployment, and even the strongest nations are hobbled by slow or no growth.
As the bank held its interest rates at current low levels, Draghi hinted there was not much more the central bank could do — having already set up extensive long-term loans to prop up the banking system — and said the bank was ready to buy government bonds to ensure no euro nation defaults.
It will be up to public officials, he said, to continue restructuring labor, social and other policies in the euro zone to revive growth.
“Structural adjustment is eventually the only thing that matters,” Draghi said. “To regain competitiveness, to create a situation where you don’t have permanent creditors and lots of permanent debtor” nations.