The President of the European Central Bank (ECB), Mario Draghi, has called upon the European co-legislators to rapidly adopt several legislative proposals on the table well before the United Kingdom leaves the EU, which is scheduled for the end of March 2019, to give the parties enough time to prepare for any eventuality, including that of a divorce with no agreement ('hard Brexit').
“Let me also stress the crucial importance of finalising the adoption of key pieces of EU legislation (…) well in advance of Brexit, in order to be prepared for all possible contingencies, including a no-deal scenario,” Draghi said.
The head of the Frankfurt-based monetary institute used the example of the 'EMIR II' proposal on the supervision of central counterparties (CCP) in the EU and third countries (see EUROPE 11966). “Failing to do so could leave central banks and supervisors without the appropriate tools to handle the risks linked to systemic euro CCPs operating outside the umbrella of EU legislation”, he said.
As the proposal on the table gives the central banks an increased role, he called for the revision of the statutes of the ECB (article 22) to allow the European institution to act within the limits of its mandate as necessary.
Draghi stressed that the European economy was going through a period of robust expansion, with stronger economic growth than anticipated. However, the inflation trajectory, which is still connected to the highly accommodative monetary policy of the ECB, has yet to show more “convincing” signs of a sustained upward adjustment, he said.
When asked about the candidacy of the Spanish Finance Minister, Luis de Guindos, for the vice-presidency of the ECB (see EUROPE 11964), Draghi said that the candidacy, which has the support of the Ecofin Council, was unlikely to overturn the independence of the monetary institute, which is laid down in the treaties. The ECB will comment give its assessment of de Guindos' application on Thursday 8 March. On Monday evening, there was a second hearing of de Guindos by the MEPs.
NPL. The MEPs asked the ECB President how best to provide a framework for non-performing loans. He responded by saying that the supervisors do not look kindly on the idea of setting quantitative targets to reduce NPL stocks, as they prefer to act on a case-by-case basis, depending on the financial institutions. However, the drafting of qualitative reports is absolutely vital, he stressed. (Original version in French by Mathieu Bion)