Feb. 7 - The European Central Bank will monitor the impact of a strengthening euro on the currency bloc's economy but said it was not a policy target and showed growing confidence in the region. Sonia Legg reports
He was there to talk interest rates but the ECB President was also under the spotlight over a trading scandal at the world's oldest bank. Mario Draghi was in charge of the Bank of Italy when a series of illegal derivatives trades allegedly took place at Monte dei Paschi bank. (SOUNDBITE) (English) PRESIDENT OF THE EUROPEAN CENTRAL BANK, MARIO DRAGHI, SAYING: "The Bank of Italy has done everything it should and appropriately and in time. But if you doubt about that you also have the IMF team who was in Italy for a financial sector assessment so within that context, the IMF has publicly stated that their preliminary view is that the Bank of Italy took timely and appropriate action, within the limits of legal framework to address problems at MPS's." Draghi also side-stepped questions about Ireland which has struck a long-awaited deal to ease its debt burdens After keeping interest rates at 0.75 percent he said the strengthening euro was his focus - although not one which required action. (SOUNDBITE) (English) PRESIDENT OF THE EUROPEAN CENTRAL BANK, MARIO DRAGHI, SAYING: "The appreciations is, in a sense a sign of the internal confidence in the euro. The exchange rate is not a policy target, but its important for growth and price stability and we certainly want to see whether the appreciation, if sustained, will alter our risk assessment as far as price stability is concerned." The euro fell broadly after the announcement but Westpac's James Shugg wasn't surprised by Draghi's stance. (SOUNDBITE) (English): JAMES SHUGG, WESTPAC, SAYING: "The European Central Bank's balance sheet has been shrinking as it has been paying back their LTROs whereas the Fed's is ballooning out as is the Bank of Japan's - there's good economic fundamental sense behind the economic appreciation of the euro on that basis alone." As for the state of the euro zone's economy as a whole it was a case of deja vu. Just like last month, Draghi said economic weakness would prevail for the early part of the year but activity should gradually recover.