欧洲央行维持主导利率在0.75%不变（2）

We are now at your disposal for questions.

* * *

Question: Two questions， Mr Draghi. There have been reports in the media in the past hour that the ECB has reached a deal on Anglo Irish Bank and I was wondering whether you could confirm that and whether you could provide us with details of the agreement?

And the second question I have is concerning the euro. I am wondering how concerned you are about the recent appreciation of the currency and how much of a risk that poses to the economic recovery that you are predicting? And related to that， I heard you have changed your language on the recovery. You said that you expected it later in 2013， whereas you said “in the second half” on previous occasions， so I am just wondering does “later in the year” mean it could be earlier than the second half or could it mean very late in 2013?

Draghi: Are you asking “at what time”? To say at what time is too hard； I cannot answer that.

But on Ireland， let me say this: there was not a decision to take. The Governing Council unanimously took note of the Irish operation and I am going to refer you to the Irish government and the Irish central bank for the details of this operation， which was designed and undertaken by the Irish government and the Irish central bank. I can only say today that we took note of this. We all took note of this.

On the exchange rate， the first thing is that the appreciation is， in a sense， a sign of the return of confidence in the euro. But net of the return of confidence， exchange rates should reflect fundamentals and， by and large， both the nominal and the real effective exchange rates are at or around their long-term averages. However， as I said last time， the exchange rate is not a policy target， but it is important for growth and price stability， and we will certainly want to see whether the appreciation is sustained and will alter our risk assessment as far as price stability is concerned. In any event， next month we will have the new projections. In the meantime， we will maintain our accommodative monetary policy stance and closely monitor money market developments.

Question : On the question about Anglo Irish Bank， you mentioned that the details should be left to the Irish government， but was this part of a careful choreography that was worked out with the Irish government? Last night we had the Irish parliament rushing through legislation， and we had the Irish President flying back from your own country to sign legislation. Was this part of choreography with the ECB?

And secondly， were all the statements from the Irish government， including the Irish Prime Minister， over the past two or three months helpful in reaching whatever we have reached today? I am still not clear what we have reached.

Draghi: Well， you are absolutely right about not being clear. We took note of an action that has been undertaken by the government. And I would not actually speak about “choreography”. It has been Irish government and Irish central bank actions. And we took note of these actions.

Question: Two questions， as usual: The first one about the LTRO repayment. What’s your verdict on it – your evaluation? How much of a normalisation of the bank liquidity situation? Do you see that positive sign? How far do you think we’ve gone down the route of normalisation?

The other one， again on the euro， I am afraid. There were calls from Monsieur Hollande – not exactly in those words， but around those words – for a “more proactive exchange rate policy” of the ECB. What do you say to that?

Draghi: Well， let me first answer the first question， which is in a sense broader. Let me go through a few of the key salient facts that will help us get a picture of the situation of financial markets and also the real economy. If you look back over the last six months， we certainly had a significant improvement on the financial side of the economy. You mentioned funding for banks: – funding for banks last month was 65% up on the level recorded in the same month last year. Sovereigns are proceeding with their funding plans. Again， just to give you an idea， 55% of total sovereign issuance last month came from non-core countries， while last year 93% of total sovereign fund issuance came from core countries alone. Let me also add that both Portugal and Ireland tapped the medium/long-term segments of the bond markets. This shows not only a return of confidence in the euro， but also confirmation of the progress that these countries have achieved in their economic policies. Target2 balances continue to improve. Also， the repayment of the LTRO is a sign of confidence. It simply says that many banks had accessed LTRO for precautionary reasons because they were， a year ago， uncertain about the liquidity situation – about the funding prospects. And now they are less uncertain， than they were a year ago. So， that is also a positive sign. Let me add one important detail， however. And I cannot go into greater detail， really. When we estimate repayment for the second LTRO， we are left quite persuaded that the excess liquidity will be well over €200 billion confirming the monetary policy stance as being accommodative. We also see continuing signs of less fragmentation in the euro area. We see cross-border activity increasing from other euro area countries into the non-core countries， but also outside the euro area into both core and non-core countries. This is clearly shown by the increase in the net external asset position of the euro area， which has gone up. So， all in all， this points to financial markets being certainly less tight than they were a year ago. Let me also add that corporate funding – non-banking corporate funding – is also having a good period. Corporate issuance is actually quite significant. Another detail， which I rarely comment on， is the cost of protecting against inflation and against deflation. This has gone down， which means that not only expectations of inflation are firmly anchored but they are anchored on both sides. So， price stability is today – at least that’s what the markets tell us – more likely than it was before. The current account surpluses of stressed countries continue to increase – and that’s also a positive sign – and unit labour costs in most of the stressed countries continue to decrease.

Now， I’ve given you a list of positives， but the situation remains fragile. And we see that this fragility is signalled by the credit flows which， as I’ve just said in the Introductory Statement， remained weak. Also， if you look at bond issuance you clearly see that， while large corporates that can issue bonds do so， and finance themselves via the capital markets， while on the other hand SMEs， which have to finance themselves via the banking market – the banks – are actually constrained. For them， credit is， and remains， tight. There is also another phenomenon which we are looking into， and that’s the situation of large banks versus small banks. It appears that small banks are tighter than large banks. So， all in all， credit costs and availability remain challenging. That’s the environment surrounding the repayment of the LTRO that has just taken place. 

Question: And my other question – the exchange rate question?

Draghi: About President Hollande. I think we should always remember that the ECB is independent. We have heard all over the world now those talking up and talking down currencies. The ultimate test of the effectiveness of this strategy will be to see what markets make of these statements.

Question: Mr Draghi， you included a new section in the Introductory Statement linking money market conditions to your monetary policy stance. Can we conclude from this that you are ready to counter any possible increase in market rates as a result of a liquidity drain with a possible cut in the main refinancing rate?

In conjunction with that， so far the ECB appears to be quite unconcerned about the impact that a drain of liquidity would have on market rates in the near term. At what level of excess liquidity would you expect there to be more significant pressure on market rates?

The final question， related to this， is: you have said that you would continue the fixed rate full allotment procedure. We knew that you would do so until mid-year， but is this an indication that you would continue the procedure beyond the current deadline?

Draghi: To the first and the third question: we do not pre-commit but， as I said， our monetary policy stance is accommodative； our overnight interest rates are close to zero. So， there are plenty of signs that we are in the full allotment mode and ready to offer liquidity to the banking system as needed.

On the second question， I said before that， according to our estimates， even after the second repayment of the LTRO， the excess liquidity should remain well above €200 billion. Third， I would not make too much of the recent increase in the EONIA because it may be due to a variety of factors， some of which are structural， depending on which banks have repaid the LTRO. So， changing the composition of the banks in the EONIA would have an effect on the levels of the EONIA itself. But there are also other factors like volatility. Nonetheless， I have said many times that our monetary policy stance remains accommodative.

I said 200 because there is， in fact， a sort of correlation， but you have to be very careful about getting stuck with a figure as there are so many other factors. If you go back and look at whether there is a one-to-one relationship between 200 and a certain level of EONIA， the answer is that it is certainly changing over time because of many other different factors: volatility， financial markets and other kinds of development.

Question: Another question on Ireland. The action that the Governing Council unanimously took note of – is this a swap of the promissory note for a government bond and， if so， would the ECB accept this government bond as collateral?

The second question is on Monte dei Paschi. Some people have said that you swept the problems at Monte dei Paschi under the carpet because a banking scandal， or in fact a melt-down， in 2011 would have spoilt your chances of becoming ECB President. What would you say to that?

Draghi: Let me first respond to the question on Ireland； I said that we took note. We do not want to enter into the details of the swap； it is entirely the work of the Irish government and the Central Bank of Ireland. As I said， we unanimously took note of this action.

On the other point， you have now had， for about a week and a half， a detailed account of the whole story on the Banca d’Italia website， where you can see that the Banca d’Italia has done everything it should have done， both appropriately and in time. If you have any doubts about that， you also have the IMF team who was in Italy for a financial sector assessment. So， within that context， the IMF has publicly stated that their preliminary view is “that the Bank of Italy took timely and appropriate action， within the limits of the legal framework， to address problems at MPS. Oversight was close and supervisory action escalated appropriately as MPS’s problems became acute. This is consistent with the overall positive assessment of the Bank of Italy’s compliance with the Basel Committee’s principals for effective banking supervision. Looking ahead， it will be important for MPS to follow through on its restructuring plans in order to restore its health and profitability.” Do not forget that it was me who signed both inspections. It was the Banca d’Italia that gave most of the papers and documentation to the judiciary. The point is that in the case of fraud， supervisors do not normally have policing or judicial powers； they supervise. Finally， I do not want to take sides on the Italian elections， but you should certainly discount much of what you hear and read on blogs， etc. as part of the regular noise that elections produce.

Question: Mr Draghi， can we just take one more run at Ireland? Because I think there is a lot of interest.

Draghi: I know that what I am saying is not satisfactory， but it is very difficult for me to say something different. But go ahead.

Question: Just to try and understand a little bit. The ECB has to sign off fortnightly on emergency liquidity assistance. Is whatever has， or has not， happened in Ireland something that the ECB still has to sign off on every fortnight? Or are there any fundamental changes in the way the Irish government is proposing to deal with this debt?

And a second question on the possibility of negative interest rates: I think you said in December that you are technically ready for that. But that debate seems to have completely gone quiet. Have you had another look at it； are you worried that maybe banks are not ready for it? Or is it something that you still stand ready to use if you decide you need to at some point?

Draghi: On Ireland， I can repeat what I said before: that the Council took note. One thing， however， that I can add is that there is no more ELA. So that is a positive step， but I can’t go beyond that because， as I said， this is entirely in the hands of the Irish government and the Central Bank of Ireland.

Question : Does that mean that…

Draghi: I think you should ask them， really.

Question: Does that mean that the sovereign bonds that are replacing the promissory notes…

Draghi: You are asking me for details which I cannot give you； which I am not in a position to give you.

Question: If sovereign bonds were replacing the promissory notes， would they be acceptable as collateral at the ECB?

Draghi: I do not think it would be right for me to comment on what another country’s government or national central bank is doing， or is about to do.

On the negative rates， frankly， the Governing Council has not changed the position that I presented at the last press conference， so it stays as I said last time.

Question: Unfortunately， I have one more question about Ireland. You said that it is a decision of the Irish government and probably the Central Bank of Ireland， and not your problem. But， at some point， I guess it could still be a Eurosystem problem because， as I understand it， the Central Bank of Ireland is now the owner of a promissory note， or something else， maybe government bonds with longer durations， which should be part of the so-called ANFA assets. I know that there are certain rules which cap these assets so， at some point this year， you have to look at that. Do you have any proposals for the Central Bank of Ireland to reduce that?

Draghi: You are running too fast， you are running ahead. We will certainly review the situation in due course. I am not saying that this is the last word on this. I am only saying that， today， the Governing Council unanimously took note of the Irish operation. So I have to say that this is certainly not the last word. We will come back to this.

Question: Why did they ask you? Why were you asked about that? Obviously they could do that without the Governing Council saying yes or no， so why did they ask anyway?

Draghi: They have taken an action. That is it.

Question: Mr Draghi， next week you are going to report to the Spanish Congress. Could you give us an idea of the messages that you are going to give to the Spanish population and the Spanish government?

Draghi: I would not want to spoil it! I am going to be there， but I have to say it will be more to listen. And I will certainly explain the monetary policy of the ECB and its impact on the euro area as a whole， the effects of fragmentation， the situation of the banking systems in the euro area， the financial markets situation and look at what are the prospects for recovery. I will not dwell on domestic economic policy and I will not comment on that. And for me， obviously， it is a unique opportunity to hear from the legislators of Spain their views about the economic situation in Spain， but also in the euro area.

Question: Maybe you could comment on the steps of France and Germany towards the splitting of the banks， or regarding stronger recovery plans. What do you intend to do in this matter? Seeing as the ECB is the bank of the banks， you have to hear the lobby which finds that these steps are wrong， or are being taken too quickly? So， maybe you could reassure the banks?

And a second question on ECB staff regarding the regulation role， some studies suggest there will be about 2000 hiring - or anything from 500 to 2000? Could you perhaps clarify this aspect?

Draghi: On the first question: at this point we are still following national developments from a distance. We also know that the European Commission will present a regulation on this. We welcome the Liikanen Report， whereby especially risky trading activities are being ring-fenced to some extent. It is quite obvious that we cannot afford to have our own separate legislations； we will eventually have to converge on one rule for the euro area， and possibly for the European Union. This would be in everybody’s interest. I should also add that the various initiatives do not differ amongst themselves in such a radical way as to rule out this eventual convergence. So， we are waiting for the European Commission， and we will then have to express a legal opinion on that， so there will be other opportunities.

On the SSM， let me go step by step， because sometimes you have sudden accelerations in the perception of how the SSM is being put in place. First of all， the legal act on the SSM has not yet been approved. Second， the consultation with the European Parliament is still in progress. Once the regulation is in force， the ECB will send a quarterly report to the European Parliament， the Council and the European Commission on the progress in its operational implementation. And this report will be public. In the meantime， we cannot take any binding organisational or administrative decisions until the legal text has been approved. Therefore， any conclusions are premature. Take for example a topic which is the source of endless attraction: the number of staff. The number of staff will depend on the actual structure and therefore cannot be defined properly yet. The ECB commissioned Promontory Financial Group to conduct a study on a possible organisation of the future supervisory function. It is a study； it is not going to be the last study that we will commission. It is one of many proposals， so it is bound to change. Nevertheless， we have started conducting preparatory work， and this is done in close cooperation with the national authorities. Let me say one important thing， however. The national central banks and supervisors are truly very supportive of this preparatory work. They have a really constructive attitude， they are eager to act to build this new institution and they have volunteered to help us through the exchange of expertise and staff.

Question: I want to go back to the Monte dei Paschi issue. Is this a warning sign that maybe the central bank is not the best supervisor for all of the euro area banks， I can only imagine in 2014 or 2015 every time something like this happens， you are going to be faced with a lot of questions and it could damage the credibility of the ECB when it comes to the conduct of monetary policy.

I also want to go back to your points on the exchange rates. You say it is not a policy objective， but it is a channel through which monetary policy transmits to the economy， so what is wrong， in an environment of low inflation， with taking policies that might have the effect of cheapening the exchange rate， helping create jobs in the manufacturing sector， in the export sector. The euro area economy is still in recession and unemployment is at a record high， they could probably use the help.

Draghi: Let me answer the second question first. The Governing Council is actually convinced that we are already implementing policies which are compatible with price stability and job creation. If you look at all the actions that we took in 2012 you are bound to reach this conclusion. We are not doing exactly the same things that are being done by the US Federal Reserve in America， I mean， the institutional set up is different， but the ECB can hardly be accused of running a policy that is not accommodative， and I have said this many times today， it is accommodative， we remain in full allotment and are ready to provide liquidity as needed. We have now changed our collateral in a way that allows banks to actually post the loans they provide as collateral for their funding. We are still left， however， with the question of why credit flows are so subdued in spite of the many things we have done. And there are several answers， one of which is fairly obvious， and it is the first that comes to mind: demand is so weak. But there are also other considerations that we want to look at， including the fragmentation between large corporates and SMEs. Again， the fact that we use the additional credit claims as a further way to provide collateral means that we have now addressed the funding issues – we cannot address the shortage of capital and we cannot address the risk aversion that has indeed reached high levels. So， the answer to this is that we will continue trying everything we can to ensure that credit flows resume， within our mandate， of course， which is maintaining price stability. At the same time， we believe that all the actions we have taken will in the end find their way through to the economy， so much so that we foresee a recovery， a gradual recovery， in the second part of this year.

Question: (laughter)... you just answered my question， in the second half?

Draghi: In the second half， yes. I said I am sorry if I don’t know the exact time， but I can tell you it will be around the second half of this year.

As to your first question: as I have said since the very beginning – and let me reiterate what I said at the first press conference， when it was not even certain that the ECB would actually be asked to take up banking supervision – “the framework of supervision has to be effective and ensure coherent oversight. Supervisory decision-making and monetary policy have to be clearly separated.” This is very important， and we have said this since the very beginning. I said many other things， but I will spare you that. So， I agree with you that separation is essential， but frankly I don’t agree with you about MPS and the future SSM being linked in any possible way other than me being former governor of Banca d’Italia and now being president of the ECB. But having shown you that Banca d’Italia acted properly and in a timely manner， there is no connection. It is very important， this point that you have raised， and many of your colleagues have raised in the articles in the various newspapers that have covered this topic in the last few days； it is very important that the governance of this new institution be really strongly separated so as to be seen as separated. So I am not sure whether the model would be like in the United States， where you have the Fed， the New York Fed and the Washington Fed， or whether there would be other models， but I am absolutely convinced of that. I am in full agreement with most of the journalists here who have written about this topic.

Question: I was wondering if there is already a lesson to be learnt from the Monte dei Paschi scandal， for example that the power to remove the heads of the banks should be given to the Bank of Italy.

Draghi: Certainly， the creation of one supervisor will involve profound legislative changes at national level， one of which concerns the powers that the supervisors have to have to be effective. And one of these powers is the power to first of all， judge a top manager of a bank to be proper and fit for the task. The second is to remove the manager if you have a sense that， for various reasons， he is no longer proper and fit. I think that is an essential component of the powers that supervisors must have. Right now， I don’t think all supervisors have these powers， but certainly some of them do. And I think， if anything， one of the things that this story shows is that having more powers would have helped； although， when you have to deal with fraud， you never know.

Question: I wanted to know if the interest rate decision was unanimous， and my second question is about Mr Weidmann， who said last month that he thought that the independence of central banks in the world was threatened to some extent. He mentioned Japan in particular， and he also warned of the risk of an international currency war. Do you share this worry?

Draghi: The decision not to change the interest rates was unanimous. Of course， there were hints and discussions about how to improve financial conditions， but that is all.

On the second question， I think I have said what I had to say about exchange rates and currency wars. I think we should have in mind one thing: changes in the exchange rates that we see today are not really deliberate changes in the exchange rates as we saw many years ago – i.e. deliberate competitive devaluations. They are more the effect of macroeconomic policies that are meant to revamp the economies， for example very low interest rates promised to be – to stay – low for a very， very long time. For example， the adoption of an inflation target which is – everything is relative of course – distant from the current inflation rates. However， if these policies produce consequences for the exchange rates that do not reflect the G20 consensus， we will have to discuss this.

Just one more thing I did not answer. I think central bank independence is the necessary complement to central bank credibility within the mandate of price stability. The three things go together. If you threaten one， you undermine the others. So， Mr Weidmann is absolutely right about being worried about central bank independence.

Question: Regarding Monte dei Paschi， I was just wondering if there is another possible lesson that could be learnt by European policy-makers and I am referring in this case to resolution. There is a resolution plan which has been discussed in Brussels. Do you think that more effective resolution should be taken into consideration in the light of banking situations like Monte dei Paschi?

Draghi: I do not want to comment on specific banks， but Monte dei Paschi has not been resolved at all. The answer is that to have one single resolution mechanism is very important. Let me immediately make it clear that this is not a bail-out mechanism， it is a resolution mechanism. Banks would and could be resolved in a uniform way in the euro area – or potentially and preferably in the European Union. It means that the Member States of the European Union would have the same resolution laws and legislation. It means that the same category of creditors would be bailed in everywhere in the European Union or in the euro area. It means that a mechanism is in place when a bank fails – even if it is large. And you would have a mechanism that can take action to resolve a bank， achieving two purposes: first， without using taxpayers money， i.e. without bailing out the shareholders or creditors of various kinds and， second， without experiencing what we had with Lehman Brothers， namely the break-up of some essential elements of our payment system. That is why it is so important. And nowadays， for many banks in the euro area， cross-border activity is so extensive that we need to move from a purely national to a supra-national resolution mechanism.

Question: I have noted that you are unable to go into the details of the Irish bank deal， but could I ask you， because a deal has been done which will save the Irish government and the Irish people an awful lot in terms of debt repayments， what impact would you expect that to have in relation to the Irish bond market， the Irish effort to exit the bail-out programme for banking， and the reputation of Ireland in the financial markets， and also in terms of the savings? Given that the ECB is part of the Troika which is supervising the Irish bail-out， is there any understanding or any preconditions or anything like that in relation to how you expect the money which is being saved on the repayments to be used by the Irish government? And， finally， I am sure people at home in Ireland would really like to know how come it took so long do you think for an agreement to be reached?

Draghi: You speak about an agreement， but I have said that there has not been any decision today. We simply took note and that is all I can say today. However， I can say that the efforts of the Irish government in this direction， but even more importantly the progress on the economic policy front and on the financial policy front， is what really matters in the end to re-establish the reputation of Ireland in the financial markets. All in all， the outlook is really positive.

Question: As the ECB is part of the Troika， do you have any understanding or any preconceived notion about how the savings should or could be used by the Irish government? Do you expect them to use it to pay down debt quicker? Or is it up to them to use it the way they wish?

Draghi: You are asking questions I really cannot answer， not only because we only took note of this today， but also because these are really internal policy matters on which the President of the ECB has no say.