Brussels, 03/03/2014 (Agence Europe) - On Monday 3 March, in the last economic dialogue with the European Parliament's economic and monetary affairs committee before the European elections, the head of the ECB, Mario Draghi, repeated the ECB's views on the single bank resolution mechanism (SRM) that is currently under negotiation between the member states and the European Parliament.
European Parliament rapporteur Elisa Ferreira (S&D, Portugal) said that time was pressing ahead and she asked Draghi to be vocal and clear about the ECB's contribution to the process of bringing the SRM on stream (see EUROPE 11029). She said that the ECB's contribution to bank supervision would not be credible in the absence of a similarly robust resolution mechanism.
Draghi said he wanted swift conclusion of an inter-institutional agreement during the current European Parliament. He said all points stood up, namely: - governance that is effective and adequate to take decisions quickly in difficult situations; - strict separation between assessments by the supervisor that a bank is no longer viable and the resolution decision - he said it was not good to combine or mingle both; - ten years before a common backstop comes on stream to mutualise risk is too long - doubling the speed does not mean that banks pay twice as quickly, but does provide a common backstop.
If the SRM remained in the member states' hands, then the problem would not be credibility of the SSM (single supervision mechanism), but rather a misalignment of responsibilities between Brussels and member states under Banking Union, explained Draghi in response to Ferreira's questions.
Refusing to reveal the ECB's position on monetary policy two days ahead of the Governing Council meeting, Draghi said that the ECB feels that inflation will remain firmly anchored at around 2% in the medium to long-term, although it is currently well below 2%. The EU's statistical office, Eurostat, says that annual inflation in the eurozone was 0.8% in February. Draghi said the longer inflation remained at such a low level, the greater the risk of it not being anchored at its reference level, which is not something the ECB wants. He said that the current low inflation was due to external factors, low energy prices, rather than internal factors like the structural adjustment process in eurozone nations in receipt of aid.
OMT. Dirk Jan Eppink (CRE, Belgium) wanted to know about the unlimited nature of the ECB's sovereign bond-purchase scheme, OMT, which has been taken to the European Court of Justice by the German Karlsruhe constitutional court (see EUROPE 11014). Draghi said the OMT programme was “full squares in our mandate, fully legal.” He told Eppink to “bear in mind that risk-sharing is for everybody, whether you participate or not.”
Ukraine. In response to questions from Olle Schmidt (ALDE, Sweden) about the economic impact of the crisis in Ukraine, Mario Draghi said: “All in all, economic impact is likely to be relatively limited” because Ukraine is not a key trading partner for the EU and European banks have little exposure in the country (only about 1%). The wider geopolitical implications of the crisis may, however, have wider repercussions on Europe that are not shown in the figures. (MB)