Brussels, 06/12/2012 (Agence Europe) - On Thursday 6 December, the president of the European Central Bank, Mario Draghi, asked the European legislator to give a sound legal basis to the new eurozone bank supervision system under the aegis of the ECB. At what will be their last meeting in 2012, the ECB Governing Council decided to keep euro interest rates unchanged.
Draghi said it was not for the ECB to choose the best legal basis for the new scheme, but leading lawyers say that Article 127.6 of the EU treaty, on which the current draft legislation is based, is “suitable,” he said, saying that he was not in a position to disagree. He said it was absolutely essential to have a legal basis, even if this slows down preparations at the ECB. At the last ECOFIN Council meeting, Sweden (backed by Germany and Poland) recommended changing the EU treaty to ensure equal treatment for non-euro countries that decide to join the eurozone bank supervision scheme. Draghi repeated the ECB's view that the new scheme should cover all banks in the eurozone to avoid fragmentation and ensure fair rules of the game for all banks, avoiding the stigmatising of certain structures. He recognised, however, that the mechanism would be decentralised. Draghi, former governor of the Bank of Italy, said it was clear that in practice, the ECB will not be capable of supervising 6,000 banks, and would have to rely on national supervisory bodies' expertise.
The ECB expects lack-lustre business in the eurozone in the first quarter of 2013, picking up in the autumn due to the ECB's “accommodative” monetary policy. Inflation is expected to continue to decline and fall back below the 2% reference point in 2013. Draghi unveiled the ECB's latest economic forecasts. Growth in the eurozone will be between -0.6% and -0.4% of GDP in 2012, between -0.9% and 0.3% in 2013 and between 0.2% and 2.2% in 2014. Prices are expected to rise on average by 2.5% this year and by between 1.1% and 2.1% in 2013. In a statement, the ECB said: “The Governing Council has decided to continue conducting its main refinancing operations (MROs) as fixed rate tender procedures with full allotment for as long as necessary, and at least until the end of the sixth maintenance period of 2013 on 9 July 2013. This procedure will also remain in use for the Eurosystem's special-term refinancing operations with a maturity of one maintenance period, which will continue to be conducted for as long as needed, and at least until the end of the second quarter of 2013. The fixed rate in these special-term refinancing operations will be the same as the MRO rate prevailing at the time.”
Greece. Mario Draghi rejected the idea that private investors have contributed more than their fair share to paying for the Greek crisis. On the contrary, he said, it was mainly public investors that have paid the price, and he mentioned the current talks about the use of Greek bonds owned by central banks. (MB/transl.fl)