Draghi: Weaponry Working in Debt Crisis

European Central Bank President Mario Draghi says his strategy for battling Europe’s debt crisis is starting to work. The ECB’s massive injection of cash into the financial system last month is beginning to lubricate seized credit markets and there are “tentative signs” of economic stabilization in the euro area, Draghi said in Frankfurt today. While “substantial downside risks” still remain, he pointed to falling yields on Italian and Spanish debt this week. That may mitigate the need for further interest rate cuts in the short term and muffle calls for the ECB to step up its government bond purchases. While the 17-nation euro region is still in danger of sliding into recession after the debt crisis spread to Italy and Spain, driving up borrowing costs and hurting the export markets of stronger economies such as Germany, recent data suggest the worst may be over. The euro rose more than a cent after Draghi’s comments to trade at $1.2826 at 8 p.m. in Frankfurt. The ECB held its benchmark rate at a record low of 1 percent after two straight reductions.