Monday, February 15, 2016

For the ECB to provide the rules of bail exceptions – Il Sole 24 Ore

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This article was published on February 15, 2016 at 16:56.
the last change is the 15 February 2016 at 17:41.

What comes first: the new rules of bail or in the stability of the credit system? ECB President Mario Draghi speaking in Brussels at the Committee Economic and Monetary Affairs of the European Parliament, opened the possibility that the new rules of bail in the event of bank rescues could be frozen if the stability of the system is put at risk. Everything already foreseen in the rules on restructuring and banking resolution.

The clarification is important. So adelante but with juicio . More specifically Draghi explained to MPs that the rules of “bail-in”, “foresee exceptions, that certain creditors could be exempted if there are situations of instability and systemic financial risk and responsibility of the European Commission and the single authority for a resolution evaluate it. ” ECB President reminded him answering a question from a representative at the European Parliament believes that the EU rules on restructuring and bank resolution (Brrd) “a change for the better because that way the taxpayers will not be called on to intervene in crisis banking. ” The ECB President has indicated that such rules exist in most countries.

More generally Draghi said that in front of the slowdown in growth in emerging markets, to cover the risk, the euro zone banks are well placed to reduce non-performing loans in an orderly manner and, thanks to new rules on capital that led the Tier 1 9 to an average of 13%, the Eurozone banks are now better able to withstand shocks.

Of course, “the decline in stock prices of banks has been boosted by the perception that banks may have to do more to adapt their business models in an environment of low growth and low interest rates, and strengthened framework regulatory set up since the crisis began, “recalled Dragons. The volatility in the stock market since the beginning of the year bank stocks thus relies on this challenge of emerging markets falling and low interest rates that reduce bank profits, but ECB President recalled that accommodative monetary policy is common in the US and in Japan, and therefore it is not a prerogative of the eurozone. To a question on damages for certain categories of investors caused by the Eurotower choices, Draghi reminded that today “there are low interest everywhere, there is nothing special in the ECB’s policies. The problems of investors, insurance companies and pension funds are the same as the US or Japan. ”

No contact with Italian government to buy bad loans
“I have no contacts between the ECB and the Italian government to buy bad loans of Italian banks, there ‘no conversation on this, “Draghi said in answer to a specific question posed by a non-Italian MEP. Draghi cited a “story” to that effect circulated in the newspapers in Italy. “I do not see where it comes from, specific” abs “can be accepted as collateral but this is different from a purchase, you must keep it in mind, and the ECB has detailed rules for the collateral that apply to all” abs “and can not nor discriminate in one direction nor the other. ”
During the discussion with parliamentarians Draghi indicated that “there was disparity in the treatment of Italian banks and that the single banking supervision authority’s mission is to apply the rules of supervision in the euro zone without discrimination. “

Now it’s also fiscal policy
” About half of the recovery of the past two years can be attributed to the choices of the ECB: indeed, over the last four years ours was the only stimulus policy “in the Eurozone, he has claimed Mario Draghi, who recalled that need greater commitment from governments on public investment and tax cuts. Public investment would also increase the productivity of the eurozone as well as the tax cut. “



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