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22 Nov 2013
Mario Draghi: We need clear public backstops at the national and European levels
FXstreet.com (London) - European Central Bank president, Mario Draghi, has said that backstops need to be put in place at a joint-European level as well as a national level ahead of the ECB bank stress test in a year’s time.
Given that the previous rounds of the banking stress tests were as effective as a chocolate tea pot, Draghi will be hoping that the next round will be more robust.
"To ensure the credibility of the exercise, we need clear public backstops at the national and European levels," said Draghi in advance of the tests to assess whether bank balance sheets are resilient enough to withstand a future crisis without resorting to taxpayer-funded bailouts.
Draghi also iterated his view that the ECB’s price stability mandate means that the central bank should step in if inflation is either too high or too low.
Earlier this month the ECB cut its main refinancing rate by 25 basis points to a record low of 0.25 percent following European inflation numbers falling to just 0.7 percent. Draghi has downplayed the possibility of introducing negative deposit rates, but earlier this week vice president Vitor Constancio fuelled speculation saying: "everything is possible."
Given that the previous rounds of the banking stress tests were as effective as a chocolate tea pot, Draghi will be hoping that the next round will be more robust.
"To ensure the credibility of the exercise, we need clear public backstops at the national and European levels," said Draghi in advance of the tests to assess whether bank balance sheets are resilient enough to withstand a future crisis without resorting to taxpayer-funded bailouts.
Draghi also iterated his view that the ECB’s price stability mandate means that the central bank should step in if inflation is either too high or too low.
Earlier this month the ECB cut its main refinancing rate by 25 basis points to a record low of 0.25 percent following European inflation numbers falling to just 0.7 percent. Draghi has downplayed the possibility of introducing negative deposit rates, but earlier this week vice president Vitor Constancio fuelled speculation saying: "everything is possible."