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ECB Chief Mario Draghi testifies before European Parliament

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European Central Bank President Mario Draghi was not able to jolt the market out of a slumber on Wednesday.
In his testimony on the 2013 ECB Annual Report before the European Parliament in Brussels Draghi defended the European Central Bank’s policy towards Greece.

He added that the central bank was ready to reinstate a waiver on Greek bonds for use as collateral for cheap ECB loans once it was convinced Greece was on track to successfully complete its bailout program.

The ECB chief told Eurozone finance ministers that Greece’s reform proposals served as a good starting point for discussing a continuation of the country’s bailout.

This week Greece secured a four-month loan extension that was approved by the Euro zone. Late on Monday the new Greek finance minister, Yanis Varoufakis, sent a six-page list of proposed economic reforms to Brussels, which was a requirement in order to be approved for the loan extension. Greece now has to stick to the broad terms of its 240 billion euro bailout .

Christine Lagarde, the head of the IMF, and Mario Draghi, the ECB president voiced strong reservations about the reform proposals, saying that the Greek menu of policies was not sufficiently specific, and did not go far enough, singling out VAT, pension and labour market reforms and privatisation as issues.

During Draghi’s hearing before the European Parliament yesterday, some parliamentarians criticized the ECB’s monetary policies and its approach to Greece as too lenient toward banks.

The euro was lifted after the approval of the Greek loan extension and has remained supported and has remained steady since then against the dollar, trading in the $1.13 handle.

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