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Summary

  1. European Central Bank (ECB) chief Mario Draghi appeared before MEPs on the Economics and Monetary Affairs Committee.
  2. The sitting was the second of the four "monetary dialogue" sessions MEPs will hold with Mr Draghi this year.
  3. During the meeting, Mr Draghi said further monetary stimulus for the eurozone was 'in the pipeline'.
  4. He also told MEPs that the ECB is 'ready for all contingencies' following the UK's EU referendum.

Live Reporting

By Paul Seddon

All times stated are UK

Session finishes

Economic and Monetary Affairs Committee

European Parliament

Brussels

And with that, this afternoon's "monetary dialogue" with Mario Draghi comes to an end. 

Swedish MEP probes on possible Brexit effects

Economic and Monetary Affairs Committee

European Parliament

Brussels

Swedish centre-right MEP Gunnar Hokmark asks Mr Draghi for which "problems we need to be prepared for" if there is a vote to leave the EU in the UK later this week. 

In reply, Mr Draghi says he "doesn't want to speculate" about the impact of a Brexit vote, although he reiterates that the Bank is "ready for all possibilities". 

He adds that the consequences of a Brexit vote would be difficult to predict, but that the Bank is making sure "existing liquidity arrangements" are "useable and adequate". 

Gunnar Hokmark
BBC

Draghi: 'No plan' to work with BoE after Brexit

Economic and Monetary Affairs Committee

European Parliament

Brussels

German social democrat Markus Ferber asks what contribution the ECB could make to a joint effort with the Bank of England to "calm the markets" following a possible Brexit vote this Thursday. 

Mr Draghi tells MEPs there "isn't any plan" with the Bank of England in particular, although there are "extensive consultations" on risk between national central banks, though no "commitments".   

Mr Draghi
BBC

'More needs to be done' to raise investment - Draghi

Economic and Monetary Affairs Committee

European Parliament

Brussels

Portuguese left-winger Marisa Matias says that the Bank's monetary policies are "not actually contributing to an increase in investment". 

She adds that the eurozone still requires "some kind of policy to stimulate demand". 

In reply, Mr Draghi says that investment in the eurozone "has now begun to recover", but concedes that the current levels of investment are "unsatisfactory" and still 10% below pre-crisis levels. 

He notes that there differences in the levels of investment in different parts of the eurozone, and that "more need to be done" overall.  

Mario Draghi
BBC

Draghi: 'No evidence' of excessive lending

Economic and Monetary Affairs Committee

European Parliament

Brussels

Finnish Conservative Pirkko Ruohonen-Lerner asks Mr Draghi whether he is worried that low interest rates might lead to "excessive lending and borrowing by households". 

In reply, Mr Draghi says the Bank "doesn't see any evidence today" of excessive lending or excessive leverage, although the situation is being constantly monitored. 

Spanish Liberal Ramon Tremosa i Balcells asks whether the ECB believes that EU debt and deficit rules should apply equally to all member states, "not only to the small ones". 

Mr Draghi replies that "rules have to be applied consistently across countries", and that the Bank will "continue to make this point". 

He says any legal questions about how the rules are being applied need to be "properly addressed". 

Ramon Tremosa i Balcells
BBC

What is the ECB’s QE programme?

Economic and Monetary Affairs Committee

European Parliament

Brussels

Quantitative easing is when a central bank buys assets, usually government bonds, with money it has "printed" - or, more accurately, created electronically.

The ECB started doing this in March last year, having previously launched programmes to buy covered bonds – backed by public sector loans or mortgages – in the autumn of 2014.

The current QE programme is due to continue until March next year, but could be extended until the Bank sees a “sustained adjustment” in eurozone inflation towards its 2% target.

The annual rate of inflation stood at minus 0.1% as of last month, up from minus 0.2% the month before. 

ECB headquarters
AFP/GETTY IMAGES
The Frankfurt-based ECB sets the main interest rates in the eurozone

Draghi: Eurozone still 'vulnerable to shocks'

Economic and Monetary Affairs Committee

European Parliament

Brussels

In reply to a question from French Socialist Pervenche Beres, Mr Draghi says that the eurozone is still "incomplete" and therefore "vulnerable to shocks". 

He adds, however, that fiscal policies should not be "overburdened" - noting that a number of member states "simply made many policy mistakes" in the run-up to the financial crisis. 

He says that "resources have been pooled together" in the eurozone to cope with challenges to the single currency, even without new institutions being created. 

Pervenche Beres
BBC

'Difficult to see' impact of UK referendum

Economic and Monetary Affairs Committee

European Parliament

Brussels

Spanish centre-right MEP Pablo Zalba Bidegan asks Mr Draghi what kind of action the ECB is preparing to take if the UK votes to leave the EU during this week's referendum. 

In reply, Mr Draghi says that it is "very difficult to see" that ways in which the vote in the UK could impact on the economies and markets in the eurozone. 

He says that the Bank has undertaken "all the preparation that is necessary", and that

at this point, it would be very very difficult to be more precise than that."

Pablo Zalba Bidegan
BBC

ECB 'ready for all contingencies' following UK referendum - Draghi

Economic and Monetary Affairs Committee

European Parliament

Brussels

Mr Draghi continues, adding that without the stimulus measures taken by the ECB, both the growth rate and inflation rate in the eurozone would be "significantly lower".

He echoes the sentiments of committee chair Roberto Gualtieri, by telling MEPs that the ECB is ready for "all contingencies" following Thursday's UK referendum vote on EU membership

He says that the EU's single market should be "deepened", particularly in the areas of energy, transport and the digital economy. 

He adds that if the eurozone's modest recovery is to be "consolidated", then there needs to be "strong policy action" to improve the competitiveness of the economy. 

Mario Draghi
BBC

Draghi: Further monetary stimulus 'in the pipeline'

Economic and Monetary Affairs Committee

European Parliament

Brussels

Mario Draghi opens the sitting with a short speech, in which he tells MEPs that the eurozone is benefiting from "moderate" economic recovery and that investment is "edging up".

He adds, however that inflation is likely to "hover at low levels" during the coming months. 

He says inflation should pick up "towards the end of 2016", with a predicted rate of 1.3% next year. 

He adds that the Bank's asset purchasing programme has "started smoothly", and that "further monetary policy stimulus is in the pipeline". 

Mario Draghi
BBC

Background: Today’s ECB court ruling in Germany

Economic and Monetary Affairs Committee

European Parliament

Brussels

Today’s committee meeting comes after Germany's constitutional court threw out a challenge to the ECB’s emergency bond buying scheme in a ruling this morning. 

The Outright Monetary Transactions (OMT) programme was launched as part of Mr Draghi’s pledge to do “whatever it takes” to preserve the euro in 2012 – although it has never been used.

The scheme had already been cleared by the European Court of Justice but had faced a challenge from a 35,000-strong German group, including politicians and academics, who said it exceeded the ECB’s mandate.

However the German court said the Bundesbank can only take part in OMT if purchases volumes are limited, and that there should be some government monitoring. 

German Constitutional Court judges
AP
OMT has faced four years of judicial battles

Good afternoon

Economic and Monetary Affairs Committee

European Parliament

Brussels

Hello and welcome to coverage of this sitting of the European Parliament’s Economic and Monetary Affairs Committee in Brussels.

MEPs will shortly be joined by European Central Bank (ECB) President Mario Draghi for the second of the four "monetary dialogue" sessions he is due to hold with the committee this year.

The meeting is expected to focus on the investment environment in the eurozone and the ECB's bond-buying programme.

The ECB has been creating new money to buy government bonds, known as quantitative easing (QE), since March last year in a bid to raise inflation and economic activity.