The Yellen fears for the British vote Dragons: ready for any emergency – BBC

the European central Bank is ready to do whatever is necessary, tomorrow and the following days, in front of the British referendum on staying in the EU – said yesterday Mario Draghi. It may seem an empty cliché. It is not. ECB President is taking nothing for granted: nor the result, Remain or Leave , or the reaction of the markets. “It ‘hard to predict the different dimensions with which the British vote will impact on the market and the economy of the Eurozone – said during a hearing in the European Parliament -. It ‘also difficult to speculate on the outcome or the other. I only say that we are ready for all possible emergencies. ” At the time, “every necessary preparation has been done.”

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Dragons does not hide to be concerned. Feeling that it was not even hidden by the President the US Federal Reserve Janet Yellen: the Brexit “could have significant economic repercussions,” he said yesterday before the Senate banking Committee in Washington, has low chance of triggering a recession in America but could “pose a risk to financial stability” one of the reasons why it expects prudence in raising interest rates. There is therefore a global alarm; and central bankers are ready even if the markets yesterday aimed at the Remain : is that markets do they know what others on the outcome of the referendum. Anything.

Of course, the emergency response would be triggered if the polls pass the ‘output in the United Kingdom by the EU. In that case, the bank in Frankfurt and the Bank of England would drive the other in entering central bank liquidity in the markets to avoid sudden crises: there ‘liquidity arrangements that can be activated in a timely manner, “said Draghi. It would be important to not only the situation on Friday but the next week and the subsequent ones. European politicians would react in some way, but so far have not shown any sign of mobilization (perhaps to avoid irritating those who go to vote).

In the first line would immediately central banks , which do not exclude targeted crisis: speculation could focus on some countries of the Eurozone with high public debt and a fragile banking system.

Should the situation become serious, though, Draghi would also provide the bazooka of Omt program, the purchase of securities of that country upon acceptance of his government of a fiscal adjustment plan yesterday the German Constitutional Court has legal judged the program and this gives the central bank a weapon not only powerful but also credible (Dragons took note).

Tuesday, ECB President also spoke about the economic situation Eurozone, which is expected to strengthen in the year although there are geopolitical risks. He argued that “the measures taken by the ECB are sufficient to bring inflation towards the expected goals.” He reiterated what was written in a few days the ECB Economic Bulletin ago: that the Stability Pact must be respected in the ways and times (an implicit criticism of the EU Commission has not sufficiently explained the flexibility adopted in judging some national public accounts) . “The credibility of the rules is essential,” he said.

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Then it was back on the need for governments to act to support growth. Draghi said that, to consolidate public finances, some countries’ have chosen the easy way out, raise taxes and reduce government investment. ” What is needed is that budgetary policies are not only respectful of the Stability Pact but also contain a growth-friendly mix. It serves “be selective” in public investment (now 10% lower, in the Eurozone, compared to before the crisis), “Education, human capital, research, digital agenda more than just infrastructure work.”

Yesterday the European Stability Mechanism confirmed that it had granted to the Greece 7.5 billion as part of the rescue plan signed last fall.

June 21, 2016 (edited June 22, 2016 | 00:10)

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