ECB’s Pres Draghi: EU treaty enshrines ECB’s independence
- Impairment of bank lending channel hurts economy
- Banks should raise capital not reduce credit
- Market tensions are dampening economic growth
- Inflation pressures should remain modest
- Collateral shortages in some market areas
- Impact of rate cut weakened, Interest rate transmission mechanism is hampered
- ECB deposit facility at post-Lehman levels
- 3 year ECB loans are a “novelty”, Longer-term loans give banks a longer horizon
- No stigma attached to the ECB lending, facilities are there for banks to utilise
- Small to medium size banks are facing a collateral shortage
- ECB carefully screens collateral in order to protect it’s balance sheet
- Reaction to the recent EU summit has been more negative than it deserved
- Differences in EU sovereign spreads bound to remain
- Stability pact broken 60 times in 12 years, mustn’t happen again
- Eurozone faces short-term contraction, but governments are on the right track
- Summit decisions can make Eurozone credible
- Greece will remain a unique case
- EFSF must be fully equipped, made available and implemented as soon as possible
- ECB will act as agent for the EFSF
- Eurozone crisis not over, important to maintain momentum
- Central Banks have differing mandates, EU treaty prohibits ECB financing
- Clear path in decision-making boosts confidence
- ECB bond buying not infinite or eternal
- Won’t comment of performance or rating agencies
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