(Bloomberg) -- Financial markets didn’t seize up in reaction to unforeseen political events because monetary policy has been ultra-loose and private-sector banks aren’t as indebted as before the crisis, according to European Central Bank President Mario Draghi.
While valuations in certain asset classes, such as prime commercial real estate, are unduly stretched, that’s not the case for markets as a whole, Draghi said at a press conference in Frankfurt on Thursday.
“Even in the face of one-off events that on other occasions would have led us to say that there would be trouble in the financial markets -- enhanced volatility, interest rates going up -- take the case of Brexit, take the case of elections in Europe here and there, people were expecting serious consequences in financial markets, it didn’t happen,” he said.
“It didn’t happen for two reasons, first of all because monetary policies remained accommodative throughout, and second because the private financial system, not being over-leveraged, was able to keep giving credit to the economy,” he added.
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