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ECB President Draghi Is Staying Discliplined

NEW YORK (TheStreet) -- The European Central Bank kept key interest rates the same at its latest meeting held Thursday, and the central bank and its president, Mario Draghi, gave no indication that further action would be taken.

The general feeling is that Draghi and the ECB won't make any more moves until at least December unless political tensions rise in Europe or in the case of a major economic shock.

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For someone who has indicated that he would do what was needed to support the euro, Draghi is now trying to shift the burden of economic policymaking to the governments within the eurozone.

For example, Draghi has suggested the economic problems in Italy are the result of a lack of labor market reform and excessive government regulation of business.

Draghi's approach is different than the one taken in the U.S., where the Federal Reserve took the responsibility for a recovery on its shoulders and executed three rounds of quantitative easing, pumping up liquidity in the banking system to dramatic heights.

But Draghi and the ECB have resisted the pressure to introduce quantitative easing. His stance reflects two points that investors should consider.

First, Draghi has seen that quantitative easing has done little, if anything, to help the American economy. He doesn't seem to want to pump all sorts of liquidity into European banks because he doesn't think that would have much impact on economic growth.

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Second, Draghi is starting to tell the leaders of some European nations to stop pushing the responsibility to do more onto the ECB and take a look at the economic reforms that are needed in their own countries.

Draghi seems to be saying the problems of slow growth in the eurozone are structural. Labor market reforms are needed and regulation of business needs to be addressed.

In effect, Draghi is saying that monetary policy can do only so much and that politicians must take on the responsibility of leading their countries.

The ECB has reduced rates about as low as they can go. The central bank approves of the continued decline of the euro, but it won't take excessive measures to achieve a greater drop. And the ECB will insist that governments in the eurozone must take action to reform business regulations and labor markets.

To me, that is a solid stance for the ECB to take.

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This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.