The outgoing President of the European Central Bank (ECB), Mario Draghi, called on Monday 28 October for fiscal capacity for the euro area that does not lead to "excessive" moral hazard.
"We need a euro area fiscal capacity of adequate size and design: large enough to stabilise the monetary union, but designed not to create excessive moral hazard", Draghi said in Frankfurt at the handover ceremony for the incoming French President Christine Lagarde, which was attended by German Chancellor Angela Merkel, French President Emmanuel Macron and Italian President Sergio Mattarella.
According to Mr Draghi, no solution for the future budget of the euro area will be perfect, since "when risks are shared, moral hazard can never be reduced to zero". At the same time, however, "we should also recognise that sharing risks can help reduce risks," he added. According to Mr Draghi, the establishment of the capital markets union, which would lead to greater risk sharing within the private sector, would "significantly" reduce the level of risk that the euro area budget would have to manage.
At the beginning of October, in Luxembourg, the Eurogroup made progress in developing fiscal capacity for the euro area, although its financing has not yet been finalised (see EUROPE 12346/2).
At the ceremony, the role of the single currency as a "symbol of the irreversibility of the European project" that unites States and peoples was highlighted several times, as was the ECB's exemplary action during the sovereign debt crisis following the 2008 financial crisis. The famous expression 'whatever it takes', intended to affirm the Frankfurt Institute's ability to act as a lender of last resort, is the main legacy of Mario Draghi. In addition, by validating the legality of the 'OMT' operation to repurchase public debt securities, the Court of Justice held that the ECB was acting within its mandate (see EUROPE 11336/18).
In her speech, the German Chancellor stressed the ECB's "independence" of political power. The French President called for the banking union and fiscal capacity for the euro area to be completed "in times that will remain turbulent".
Taking over the reins of the monetary institute from 1 November, Christine Lagarde, to whom Mr Draghi passed on the presidential ceremonial bell, pointed out that, under Mr Draghi's mandate, the euro has become "more popular than ever". (Original version in French by Mathieu Bion)