With the scandal of the Estonian subsidiary of the Danish bank Danske Bank continuing to snowball, Mario Draghi reiterated the position of the European Central Bank, of which he is the President, in favour of creating a European authority competent in matters relating to the fight against money laundering, on Monday 24 September (see EUROPE 12100).
“The current situation is unsatisfactory”, Draghi told the committee on economic and monetary affairs of the European Parliament, in response to questions from French members Pervenche Berès (S&D) and Bernard Monot (ELDD). The ECB considers that the European authorities need to fight money laundering more effectively, but as this will happen again before long, we have decided to create a single point of entry at the ECB, he added, stressing that currently, the monetary institute was not competent in either preventing fraud or bringing it to justice.
Setting out the benefits of forward guidance by the ECB, Draghi stressed that monetary policy will continue to be broadly accommodative, even after the operation for the mass buyback of mainly public securities ('quantitative easing' or QE) comes to an end in January 2019 (see EUROPE 12095). He repeated the European institution's GDP growth forecasts for the Eurozone (2.0% in 2018, 1.8% in 2019 and 1.7% in 2020) and inflation forecasts (1.7% in 2018, 2019 and 2020). On this point, the former President of the Bank of Italy also noted a “relatively vigorous pick-up in underlying inflation” (not including energy and food prices).
Brexit. Seeking to reassure Markus Ferber (EPP, Germany), the ECB President said that he hoped for fruitful post-Brexit cooperation with the Bank of England. He considers that the impact of British withdrawal on the real economy is likely to be limited, other than on the derivative products markets, with much clearing carried out in the City of London. There is a risk and there is not much time left, he observed, referring to contractual positions on derivative products going beyond Brexit, currently scheduled for the end of March 2019.
In response to Brian Hayes (EPP, Ireland), Draghi said that he was quite sure that whatever happens on the Brexit front, the Twenty-Seven will stand united. “One of the values of the EU is solidarity”, he stressed.
As regards the proposal by the President of the Commission, Jean-Claude Juncker, to boost the euro's international role, Draghi said that the single currency had lost ground in recent years, although it is still the world's second reserve currency. He said that as the international role of the euro is mainly dictated by market forces, the single currency is likely to gain in strength more as Banking Union in the Eurozone and the Capital Markets Union are completed. (Original version in French by Mathieu Bion)