ECB's Draghi at European Parliament
BRUSSELS (Reuters) - Following are comments taken from the text of European Central Bank President Mario Draghi's speech prepared for delivery at the European Parliament on Monday, and his responses to questions from parliamentarians.
Full text of speech available here: here
"The exchange rate is not a policy target but is important for growth and price stability."
"To the downside ... appreciation of the euro is a risk"
"On the exchange rate, what I always say is, the exchange rate should reflect fundamentals."
"Most of the exchange rate movements that we have seen were not explicitly targeted, they were the result of domestic macro economic policies meant to boost the economy. In this sense, I find really excessive any language referring to currency wars."
"Looking at the nominal and real exchange rate of the euro, we see that by and large, it is around its long-term average."
"We will have to assess in the coming projections whether the exchange rate has had an impact on our inflationary profile, because it's always through price stability that we address issues like that."
"The G20 communiqué is not disappointing."
"What I did say at the G20 in Moscow, I urged all parties to (exercise) very, very strong verbal discipline."
"Overall inflationary pressures should remain contained over the policy-relevant horizon."
"We entered 2013 in a more stable financial environment than in recent years. This has been achieved through concerted reforms by governments and parliaments and decisive actions by European institutions.
"But considerable further efforts are needed to ensure that Europe continues emerging from the crisis."
"Economic weakness in the early part of 2013 is expected to be followed by a very gradual recovery later in the year. Strengthening global demand, our accommodative monetary policy stance and the improvement in financial market confidence across euro area countries should all work their way through to spending and investment decisions and support the recovery."
"Another sign of improved confidence is the larger than expected early repayment by counterparties in the first of our two three-year longer-term refinancing operations settled in December 2011 and March 2012. This indicates that banks are less uncertain about their funding prospects than a year ago."
"If they don't do the proper deleveraging, they won't be able to do the credit that we are really now struggling with... That's policy challenge No.1 - we want to see the credit numbers going up."
"In countries where the deleveraging process has still a way to go you would expect credit will take more time to get through through the economy because the borrowers themselves have this lead in their balance sheet, these investments that need to be liquidated."
IMPACT OF POLICY
"The ECB is aware of the challenges arising from a protracted period of low policy rates and ample liquidity."
IRELAND BOND DEAL
"This is a transaction between the Irish government and the Central Bank of Ireland. The Governing Council didn't have to pass a judgment on this, and it will do so, however, in the context of our yearly assessment of monetary financing situations in the different members of the Euro System."
"I don't want to pass a judgment but .. some developments of that have been positive. Crucial in the future will be the disposal policy by the Central Bank of Ireland of these bonds."
IRELAND EXITING BAILOUT PROGRAMME
"Ireland has been on track on I would say virtually all parts of the program with remarkable success, and the achievements have been really very meaningful. There are parts of it in the financial sector where further action is needed, but by and large it has really performed admirably well so I think the program will have, if I am not mistaken, a natural date of expiration at the end of this year - then it will be judged."
"We welcome the commitments of the Cypriot government to the draft memorandum of understand and we appreciate that the authorities have started to implement of the first leg of agreed reforms. After the presidential elections in Cyprus, it is very important that the program be agreed. The Eurogroup statement says there will be a program ... so it is absolutely essentially that there is national ownership of this program after the elections. We also have to find ways to ensure sustainability of this program.
"I don't want to prejudge the discussions and the ones that will take place and to say now how this debt sustainability is going to be reached, but we have to keep in mind that we have two sides to this. On the one had we want to ensure that Cyprus has sustainability and ensure that we don't lose financial stability.
"Also the government's supervision of the financial sector will have to be strengthened. Regulations of liquidity, including provisioning lending and disclosure will be revised and the final version of the adjustment program should also provide for close monitoring of anti-monetary laundering and tax evasion."
"Last year, by this time of the year, 90 plus percent of sovereign issuance was coming only from core countries. Now (in 2013), about 60 percent of sovereign issue comes from periphery countries."
"The investors base has broadened considerably, so that we don't see only domestic investors buying bonds issued by sovereigns, and by the banks, and by the large non-banking corporates."
ECB VS BOE-STYLE FUNDING FOR LENDING
"We've got to be careful about conditionality because if we force banks into lending to the wrong borrowers then we have to have the responsibility for their choices, if the borrowers fail and don't repay the banks...
"We have 17 countries, so the monitoring of these selected programs where we would have to check that each bank actually borrows for lending, the monitoring is way more complicated than in one country."
ON THE EURO
"How would countries with different currencies have performed during the crisis of 2008? The answer that we give is that the instability coming from that would have been much much bigger than the one we actually had.
"The decision to join the euro is completely in the decision-making of the single, individual governments, the individual countries."
"There are many merits for the euro. We have now a financial market which we didn't have before of a size comparable to the one in the United States. We have price stability that we didn't have before for many countries."
"The ultimate intent is to preserve the single market - so achieve what we need for the euro but at the same time preserve the single market."
(Compiled by London Treasury Desk)
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