European Central Bank president Mario Draghi has pledged to do all he can to support the euro in coming weeks, but can he really do anything to alleviate the problems of the single currency?
Investors have heard plenty of promises from European policymakers and leaders over past months, but the crisis is still rumbling on without any seeming end in sight.
The questions for Draghi are if he can do something, why hasn’t he he done yet and why should anyone believe him now?
“The euro is irreversible,” he said. “Policymakers in the euro area need to push ahead with fiscal consolidation, structural reform and European institution-building with great determination.
“The adherence of governments to their commitments and the fulfilment by other eurozone regulators of their roles are necessary conditions.”
The allusion is that politicians are dragging their heels and preventing Europe’s financial regulators from stepping in to get to grips with the eurozone debt crisis.
Draghi also hinted that the ECB will take steps to address investor issues about debt seniority as many private investors are concerned that if the ECB buys government bonds, the bank would take precedence over them if a country defaulted on debts.
Jason Gaywood, director at currency specialist HiFX, said: “Short-term market action from here is likely to be negative with both European equities and the Euro itself likely to show losses as traders confidence wanes in the wake of this indecision. The seemingly eternal fence sitting and rhetoric continues.”
Meanwhile, the ECB and Bank of England both announced interest rates would remain pegged at record lows.
In Europe, the rate stays at 0.75% after a 0.25% cut last month, while in the UK, the official bank rate stays at 0.5%, where it has sat since March 2009.
The Bank of England also left quantitative easing at £375 billion.