The top policymaker said that the ultra-loose monetary policy – the benchmark refinancing rate stands at 0.75 per cent – has not been getting through to firms and households.
Five years after the onset of the financial crisis, he has now had to resort to creative new measures to try to get the benefit of low rates through to the worst-hit economies.
“In some countries, the rate cuts were fully passed on. In others, the rates charged on loans declined only little. And in others, some rates have actually risen,” Draghi told an Italian university.
“The outright monetary transactions (OMTs) have been designed to restore the transmission of monetary policy.”
Under the scheme the ECB will buy Spanish government bonds, as long as the government agrees to tough conditions.
But he denied buying the debt counted as financing the state – a key worry for more fiscally prudent Germany.