Spending by governments in response to the influx of refugees to Europe could prove to be a stimulus for the economy, European Central Bank (ECB) President Mario Draghi told participants at the World Economic Forum Annual Meeting 2016. “One driver of the economy, which still hasn’t deployed its effect, is the probable increasing government expenditure to cope with the refugees,” he said. “For Europe, the refugees are a challenge and an opportunity. Our society will change, in which direction one can only guess. The government expenditure needed to cope with this challenge could be a large stimulus to growth.”

Commenting on the US Federal Reserve Bank’s decision at the end of last year to raise interest rates, Draghi called the decision “appropriate, given the recovery cycle of the US economy.” The change in monetary policy “was patently communicated and flawlessly executed,” he added. The ECB chief explained that the differing monetary policies in Europe and the US reflect their different positions in their respective recovery cycles. “The US is more advanced, so it is entirely natural that monetary policies differ and that they will be on a divergent path for a while,” he said.

On Greece, Draghi observed that the situation has improved. “The Greek government has made much progress in undertaking reforms and fiscal consolidation,” although more work is required in financial-sector reforms and addressing non-performing loans, among other areas. Added Draghi: “Speed is of the essence. The sooner this is concluded, the sooner the Greek economy will get back to a normal situation.”

Asked about the strength of the European Union and the zeal for deeper integration, Draghi told participants that the early proponents of the European project did not anticipate a linear process that would be without bumps. “All European leaders are trying to drive their people closer to the common European interest in a way that is respectful of democracy,” he said. “What is always true with a crisis is that there can’t be a purely elitist process, but it has to be democratic. That is why after a crisis is resolved, the democracies are stronger and the common journey to an ever closer union is continued.”