FRANKFURT, Oct. 2 (Xinhua) -- Mario Draghi, president of the European Central Bank (ECB), has called for an "investment-led stimulus at the euro area level" to tackle the challenge of declining rates and counter the risk of recession.
"This would be the best way to achieve an efficient distribution of spending among euro area countries -- and is a further reason why I have called for a euro area fiscal instrument," Draghi said while addressing the Academy of Athens on Tuesday.
The European Commission in July proposed a governance framework for the Budgetary Instrument for Convergence and Competitiveness (BICC) to enhance economic resilience of member states and of the euro area through targeted reforms and investment. Finance ministers of the eurozone discussed issues under BICC in a meeting last month.
Draghi said Tuesday that the agreement on the BICC is "a step in the right direction, but it does not yet meet the necessary criteria in terms of size or design," according to his speech published by the ECB.
Facing a new environment of falling natural rates of interest and slowing growth potential across advanced economies, monetary policy increasingly has to use unconventional policies to achieve its mandate, and to do so for longer and with more intensity, according to Draghi.
Other policies, namely structural and fiscal ones, are required for interest rates to rise significantly in the future, he added.
"Whichever route is taken, monetary policy will continue to do its job," the ECB president said, noting that the latest decisions by the ECB "have shown its determination in the face of a continuously weakening outlook for growth and inflation."
A package of easing measures that the central bank announced in September, which includes a rate cut and a massive bond-buying program, has drawn mixed responses.