Eurozone governments must get their economies in order if the euro area is to recover from its long crisis, European Central Bank chief Mario Draghi said on Thursday.
Following the surprise ECB rate cut last week and the announcement of additional measures to ease monetary conditions in the 18 countries that share the euro, the onus was now on politicians, Draghi told a financial forum in Milan.
A copy of his speech was made available by the ECB in Frankfurt.
A policy mix involving monetary, fiscal and structural policies was needed "to jump-start the economic recovery in the euro area," Draghi said.
"We are currently facing a set of conditions –- low growth and low inflation, high debt and high unemployment –- that can only be addressed by concerted action on both the demand and supply sides of the economy. This requires all actors –- both at national and European level -– to play their parts in line with their respective mandates as laid down in the EU treaties," Draghi said.
A week ago, the ECB's decision-making governing council voted to cut the bank's key interest rates to new all-time lows to prevent the rot of deflation setting in the faltering eurozone economy.
And it also promised to launch a programme of asset purchases to inject cash into the economy.
However, that was not enough, Draghi insisted.
"No monetary stimulus, indeed no fiscal stimulus, can be successful unless accompanied by the right structural policies -– policies that foster potential growth and instil confidence," he said.
"We will not see a sustainable recovery" unless there was "a decisive rise in investment," Draghi argued.
That was "essential to bring inflation closer to where we would want to see it, to stimulate the economy, and to bring down unemployment."
And in order to boost investment, structural reforms were needed, he said.
"The regulatory environment should be made more favourable to economic growth."
And companies needed to have access to more diversified sources of financing.
"The launch of a capital markets union could contribute to achieving this and, at the same time, help overcome the remaining fragmentation of financial markets," he said.
Investment was key to a sustainable recovery in the euro area, Draghi said.
"If we don't manage to get investment going again, we will weaken the economy in the short run and undermine its prospects in the long run.
"Our efforts should therefore be focused on jump-starting investment," Draghi said.
"However... we will only manage to stimulate investment if structural, fiscal and monetary policies mutually reinforce each other," the ECB chief concluded.