Avrupa Merkez Bankası Başkanı Mario Draghi, Avrupa'nın
içinde bulunduğu krizle ilgili açık yüreklilikle konuştu. Draghi Financial
Times ile gerçekleştirdiği röpörtajında, EFSF'nin ocak ayında operasyonel hale
geleceğini söyledi. Ülkelerin ağır kararlar vermektense, Euro'dan çıkıp
devalüasyon yapmalarının daha az maliyetli olup olmayacağına yönelik soruya.
'Yüksek enflasyonla karşı karşıya kalırlar. Aynı kararları o zaman da almak
zorundalar. Ama Eurozone'dan ayrıldıkları zaman aynı kredibiliteye sahip
olmayacaklar.' şeklinde cevap verdi. Draghi dünya ekonomisine ilişkin olarak da
'Dünyanın birçok bölgesinde gözle görülür bir şekilde yavaşlama olacak. Global
büyüme yavaşlıyor ve belirsizlik artıyor.' yorumunda bulundu.(Financial Times)
RÖPORTAJIN ORJİNALİ İÇİN HABERİN DEVAMINDA:
Financial Times: We are now more than four
years into the financial crisis. What lessons would you draw so far? What has
gone right and what has gone wrong?
Mario Draghi: We have to distinguish two
stages. First was the financial crisis, with its repercussions for the real
economy. I think we learnt the lessons that we need a more resilient financial
system, a system where we would have less debt and more capital. There has been
substantial progress in designing new regulatory policies and some progress in
implementing this new design.
The second stage of the crisis is really a combination of, I would
say, a challenging political phase, where euro area leaders are reshaping what
I called the fiscal “compact,” and a situation where banks and countries face
serious funding constraints. These challenging funding conditions are now
producing a credit tightening and have certainly increased the downside risks
for the euro area economy.
Action is proceeding on two fronts. At last week’s European Union
summit you saw a first step towards fiscal rules that are not only more
binding, but actually are of a different nature. They would be binding ex ante,
which is an entirely new quality, and written into the primary legislations of
the member states. The second line of action is a set of meaningful,
significant decisions taken by the ECB last week. We cut the main interest rate
by 25 basis points. We announced two long-term refinancing operations, which
for the first time will last three years. We halved the minimum reserve ratio
from 2 per cent to 1 per cent. We broadened collateral eligibility rules.
Finally, the ECB governing council agreed that the ECB would act as an agent
for the European Financial Stability Facility (EFSF).
FT: Will the three-year
refinancing operations give banks an incentive to buy “periphery” eurozone
bonds?
MD: Not necessarily. Of course
banks also have capital difficulties, and these measures don’t necessarily help
them on that side. The objective is to ease the funding pressures that banks
are experiencing. They will then decide what the best use of these funds is.
One aspiration is to have them financing the real economy, especially small and
medium sized enterprises (SMEs). What we are observing is that small and medium
sized banks are the ones having the biggest funding difficulties, and they are
generally the ones who provide most of the financing for the SMEs. And SMEs
account for about 70 per cent of employment in the euro area’s corporate
sector.
FT: Is this Europe’s version of
“quantitative easing”?
MD: Each jurisdiction has not
only its own rules, but also its own vocabulary. We call them non-standard
measures. They are certainly unprecedented. But the reliance on the banking
channel falls squarely in our mandate, which is geared towards price stability
in the medium term and bound by the prohibition of monetary financing [central
bank funding of governments].
Coming back to what banks are going to do with this money: we
don’t know exactly. The important thing was to relax the funding pressures.
Banks will decide in total independence what they want to do, depending on what
is the best risk / return combination for their businesses. One of the things
that they may do is to buy sovereign bonds. But it is just one. And it is
obviously not at all an equivalent to the ECB stepping-up bond buying.
FT: Do you expect, in the next
six months, another round of bank recapitalisations and, in some cases,
nationalisation?
MD: Last week, we had the
results of the European Banking Authority (EBA) “stress tests” exercise. But
ideally, the sequence ought to have been different: We should have had the EFSF
in place first. This would have had certainly a positive impact on sovereign
bonds, and therefore a positive impact on the capital positions of the banks
with sovereign bonds in their balance sheet. So the ideal sequencing would have
been to have the recapitalisation of the banks after EFSF had been in place and
had been tested.
In fact, it was done the other way round, so the capital needs
identified by the EBA exercise reflect stressed bond market conditions. That
may exert pressure on banks to achieve better capital ratios by simply
deleveraging.
Deleveraging means two things; selling assets and/or reducing
lending. In the present business cycle conditions, I think the second option is
by far the worst. I understand regulators have recommended to their banks that
they shouldn’t go this way, so let’s hope they follow this advice.
FT: Couldn’t somebody just say
to the EBA, look, just hold off now, this is completely unhelpful?
MD: I think the press
statement by EBA somehow hints at that, because they say that there wouldn’t be
another exercise next year.
To be fair to EBA, the shape of the exercise was decided at a time
when the biggest economic threat seemed to be the banking system’s lack of
credibility. People feared banks’ balance sheets concealed fragilities that in
the end would strain the economies. So they started this exercise thinking
that, being transparent, and marking-to-market sovereign bonds, would
strengthen the credibility of the banking system and reduce risk premia. At the
end, it did not work that way because of the sequencing. But I wouldn’t say
it’s EBA’s fault.
FT: The big point here though
is, at least the world in 2011, has fundamentally changed, if not for the last
two years, where a position where equities would be seen as more risky than
government bonds is now in reverse ….
MD: The big change is that
assets which were considered absolutely safe are now viewed as potentially
unsafe. We have to ask what can be done to restore confidence. I would say
there are at least four answers.
The first, lies with national economic policies, because this
crisis and this loss of confidence started from budgets that had got completely
out of control.
The second answer is that we have to restore fiscal discipline in
the euro area, and this is in a sense what last week’s EU summit started, with
the redesign of the fiscal compact.
However, we are in a situation where premia for these risks
overshot. When you have this high volatility – like we had after Lehman – you
have an increase in the counterparty risk. In the worst case, you can have
accidents and even if you don’t have accidents, you have a much reduced
economic activity because people become exceedingly risk averse.
So the third answer to this is to have a firewall in place which
is fully equipped and operational. And that was meant to be provided by the
EFSF.
The fourth answer is to again ask: why are we in this situation.
Part of this had to do with fiscal discipline, but the other part was the lack
of growth. Countries have to undergo significant structural reforms that would
revamp growth.
FT: And the fifth answer is
that the idea of introducing private sector involvement (PSI) in eurozone
bail-outs was, in retrospect, a mistake?
MD: The ideal sequencing would
have been to first have a firewall in place, then do the recapitalisation of
the banks, and only afterwards decide whether you need to have PSI. This would
have allowed managing stressed sovereign conditions in an orderly way. This was
not done. Neither the EFSF was in place, nor were banks recapitalised, before
people started suggesting PSI. It was like letting a bank fail without having a
proper mechanism for managing this failure, as it had happened with Lehman.
Now, to be fair again, one has to address another side of this.
The lack of fiscal discipline by certain countries was perceived by other countries
as a breach of the trust that should underlie the euro. And so PSI was a
political answer given with a view to regaining the trust of these countries’
citizens.
FT: Coming to the fiscal pact,
what is your answer to those who say there is excessive concentration on
budgetary rigour at the expense of competitiveness and growth and that actually
what is being created is a “stagnation and austerity union”?
MD: The answer is that they
are right and wrong at the same time. They are right because there can’t be any
sustainable economy without growth and competitiveness and job creation. They
are wrong if they think that there is a trade-off between the two. There’s no
trade-off between fiscal austerity, and growth and competitiveness. I would not
dispute that fiscal consolidation leads to a contraction in the short run, but
then you have to ask yourself: what can you do to mitigate this?
Improvement in budgetary positions should elicit some positive
market response, lower spreads and lower cost of credit. But two further
conditions have to be satisfied: Implementation at national level of the
structural reforms needed to enhance growth and jobs creation. And finally, it
is necessary to have the right euro area design, implementing the fiscal
compact, so that the confidence is fully restored. Austerity by one single
country and nothing else is not enough to regain confidence of the markets – as
we are seeing today.
Consolidation must also go hand in hand with structural reforms.
Each country has its own path that they should undertake. For some, the
situation would not be sustainable even if they were outside the euro and were
to devalue their currency. That would give only a temporary respite – and
higher inflation, of course.
FT: But that was part of the
answer in the early 1990s in Italy – it did have an exchange rate adjustment.
MD: If you take that as an
example, remember there was no IMF around, there was no EFSF and gross
[government bond] issuance in 1992 was a multiple of the figures that we see
today. It’s true that Italy moved the exchange rate, but this cuts both ways.
It brought a temporary respite to the economy, so that exports could grow, but
it also widened sovereign bond spreads because exchange rate risk came on top
of sovereign risk. Three or four years down the road Italy still had something
like 600 basis point spread with respect to the German Bund. Furthermore, the
effect of the devaluation would have been only temporary without the structural
reforms (abolition of indexation among others) that followed.
FT: But these austerity
programmes are very harsh. Don’t think that some countries are really in effect
in a debtor’s prison?
MD: Do you see any
alternative?
FT: They could leave the
eurozone?
MD: But as I said before, this
wouldn’t help. Leaving the euro area, devaluing your currency, you create a big
inflation, and at the end of that road, the country would have to undertake the
same reforms that were due to begin with, but in a much weaker position.
FT: … But maybe it would be
the best thing for the rest of the eurozone?
MD: Well, then you would have
a substantial breach of the existing treaty. And when one starts with this you
never know how it ends really.
FT: You said earlier that it
would have been far better if the EFSF had been in place. So where are we on
creating this firewall – what size of bazooka are we talking about?
MD: One first observation is
that the delay in making the EFSF operational has increased the resources
necessary to stabilising markets. Why? Because anything that affects
credibility has an immediate effect on the markets. A process that is fast,
credible and robust needs less resources.
FT: It sounds like you’re a bit disappointed then with the outcome of
last week’s summit then?
MD:
Actually no, because there was confirmation of previous figures on the EFSF’s
resources – and of an additional €200bn that could be provided by the
International Monetary Fund. What was also overlooked by many is that the date
for a first assessment of the adequacy of resources has been brought forward to
March 2012 – in just three months’ time, when the leaders ask themselves
whether the resources for the firewall will be adequate. In the meantime, the
ECB acting as an agent will make the EFSF operational. Important was also the
commitment to clearly restrict the PSI to IMF practices, which should reassure
the investors.
FT: When do you think the EFSF will be operational?
MD: Our aim is to be ready to
provide agency functions in January next year.
FT: But can we assume that the idea floated in October of leveraging
the EFSF is not actually going to happen? And that bringing in other sovereign
wealth funds, Chinese, all this was overpriced.
MD: No, I think it is
premature and probably wrong to proclaim the EFSF dead. Furthermore I think
that if one can show its usefulness in its present size, the argument for its
enlargement would be much stronger.
FT: What do you say to those who say the solution is to have a very
big firewall and ultimately put the ECB behind it, because that is the only
thing which will tame the markets?
MD: People have to accept that
we have to and always will act in accordance with our mandate and within our
legal foundations.
FT: But if you look at the wording of the treaty, there is nothing
that sets a limit on how many government bonds you buy ….
MD: We have to act within the
Treaty. In general, there must be a system where the citizens will go back to
trusting each other and where governments are trusted on fiscal discipline and
structural reforms.
FT: Once the firewall is in place with the EFSF, perhaps as soon as
the beginning of next year, might you actually stop the SMP (securities market
programme)?
MD: We have not discussed a
precise scenario for the SMP. As I often said, the SMP is neither eternal nor
infinite.
Let’s not also forget that the SMP was initiated with the view to
reactivating monetary policy transmission channels. So as long as we see that
these channels are seriously impaired, then the SMP is justified.
FT: Arguably, the monetary transmission channels are more impaired
than ever before, if you look at interest rates in Greece or Italy compared
with Germany?
MD: The cost of credit is
bound to differ because it’s geared to some extent not on our short-term policy
rate but on sovereign spreads.
FT: Would the ECB consider putting a limit on yields or spreads, or
would that violate the treaty in your view?
MD: Sovereign spreads have
mostly to do with the sovereigns and with the nature of the compact between
them. It is in this area that progress is ongoing. Monetary policy cannot do
everything.
FT: But if the economic situation deteriorated, would you be prepared
to embark on “quantitative easing” in the style of the US Federal Reserve or
Bank of England, in terms of large-scale government bond purchases to support
economic growth?
MD: The important thing is to
restore the trust of the people – citizens as well as investors – in our
continent. We won’t achieve that by destroying the credibility of the ECB. This
is really, in a sense, the undertone of all our conversation today.
FT: What will be the effect of the British staying out of Europe’s
fiscal compact, and is there in your view a risk to the City of London?
MD: The UK certainly has shown
a capacity to undertake a fiscal correction of an extraordinary size. My more
general reaction to all this is that it’s sad. I think the UK needs Europe and
Europe needs the UK. There’s a lot that can be learnt from both sides.
FT: The UK has taken legal action against the ECB [over the location
of financial market clearing houses] …
MD: I can’t comment on that.
FT: What are you expectations for global growth next year?
MD: You could have a
significant slowdown in several parts of the world. Global growth is
decelerating, and uncertainty has risen. At the same time, we have laid a lot
of groundwork for a better functioning of economic union in the future and we
should draw confidence from that.
