Brussels, 09/10/2012 (Agence Europe) - The special Outright Monetary Transactions (OMT) recently announced by the European Central Bank (ECB) will not be a substitute for struggling countries getting finance from the money markets and will not replace measures to be taken by government, explained the head of the ECB, Mario Draghi, on Tuesday 9 October at a hearing at the European Parliament's Economic and Monetary Affairs Committee. He said the OMT would not lead to an overall increase in liquidity.
Draghi recognised that genuine, tangible sacrifices had been made in the austerity programmes introduced by countries to cut their deficits, but the sacrifices had not been in vain, as shown by Portugal, which has successfully issued sovereign bonds on the international money markets (last week) and Ireland, where very clear progress has been made, he said, and the country was gradually finding it can raise cash on the money markets.
Although the structural adjustment programmes have not yet had a totally visible impact on daily lives of citizens in countries still suffering from the crisis, Draghi said, the eurozone and its weakest members at the moment will emerge from the crisis with a stronger, more efficient economy.
In January 2013, the ECB will be given new powers of scrutiny over eurozone banks. Draghi said it was out of the question for the ECB to replace national supervisory bodies, as all were part of the same project. He said there would not be much change in the way subsidiarity is carried out, but purely national mindsets in the design and implementation of economic policies would have to be overcome.
Draghi said he was pleased and reassured about the “open” attitude of national supervisory bodies.
The MEPs on the Economic and Monetary Committee asked the ECB president for his views on whether non-euro countries should be allowed to be part of the common bank supervisory scheme. He answered that the ECB has an open mind on the matter, he said, adding that it might help extend the single market. That said, Draghi pointed out that the ECB's powers are limited to the eurozone and the legal framework could not be ignored and solutions would have to be found.
Commenting on the pooling of risk that might emerge at a later stage, Draghi said this would be based on trust and would require the political will to share national sovereignty at the super-national level.
A common crisis-management system is crucial, but things must be done step-by-step in the right order so as not to repeat the mistakes of the past. He said that working in stages made life difficult and put a brake on the process, but was nevertheless wholly realistic. (EL/transl.fl)