Draghi warns of bubbles in the eurozone

According to Mario Draghi, there are "mild signals" of overvaluation in the financial markets and in real estate in Europe. The governor of the central bank said this on Friday at the International Monetary and Financial Committee in Washington. He Warned that financial stability is under pressure because the outlook for the global economy has deteriorated.

"There are mild signs of overvaluation in the eurozone and in a number of risky segments of the financial markets, as well as in real estate markets," said the President of the ECB. In doing so, he is effectively acknowledging that the accommodative monetary policy of the past eight years has contributed to the overvaluation. Low interest rates have caused the prices of all kinds of investments ranging from stocks and bonds to real estate to rise. 

End of the Draghi era 

Mario Draghi will step down from his position as central bank president on October 31. Over the past eight years, he has successfully steered the currency union through the European debt crisis, but not without a price tag. For example, the ECB has bought more than €2,400 billion worth of bonds since the crisis. Interest rates were also lowered to zero, with all the consequences that this had for savers and pension funds.

Last month, Draghi was widely criticized for his decision to buy government bonds again. Several former central bankers wrote a memorandum, in which they complained about monetary policy. They believe that the central bank's policy has deviated too far from its mandate of price stability. In their letter, the central bankers also warn of the negative effects of extremely low interest rates, such as the creation of speculative bubbles.