The European Central Bank's massive bond purchase programme will not ease pressure on governments to reform, but actually magnify the benefits of those reforms, ECB president Mario Draghi said Wednesday.
"The beneficial impact of our asset purchases on financing conditions, rather than reducing the incentives for reforms, will actually increase the benefits of such reforms," Draghi told a banking conference in Frankfurt.
The ECB has embarked on a policy of so-called quantitative easing or QE, under which it plans to buy 1.14 trillion euros worth of bonds over the next 18 months. The aim is to pump liquidity into the system so as to ward off deflation and spur growth in the single currency area.
But QE has its critics, particularly in Germany, who argue that it reduces the pressure on eurozone governments to get their finances and economies in order.
Draghi disagreed.
"Effective, price stability-oriented monetary policy and structural reforms work hand in hand," he argued.
"Our recent monetary policy measures are a valid and effective tool to bring inflation closer to our policy goal. They can support a faster and more sustained recovery. This will especially be the case if they fall on fertile ground," the ECB chief said.
With an environment of low interest rates and plenty of liquidity, "governments can create a more investment-friendly environment by swiftly, credibly and effectively implementing structural reforms... Firms will be encouraged to increase investment, bringing forward the economic recovery," Draghi said.