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The President of the European Central Bank (EBRD), Mario Draghi, on Monday called on the European Central Bank to strengthen the economic and financial stability of the euro area
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The ECB considers that the European Deposit Insurance Scheme (EDIS) is essential to strengthen the confidence of bank depositors in the overall currency
However, European leaders have not managed to to an agreement at the June summit, partly because of rejection by Germany, and left a solution to this problem and to other problematic issues, such as the common budget of the eurozone
Sharing is not ruled out with risk reduction [19659007] Draghi, however, said the eurozone should not postpone the issue.
Germany has long been opposed to EDIS. He argued that Berlin could be held accountable for bank failures in financially irresponsible euro area member states.
The German central bank has conditioned the deposit guarantee of banks in other Euroregional countries by reducing the risks of these financial institutions. "This should not prevent us from dividing risk mitigation and risk sharing," Draghi told MPs, noting that both concepts are mutually beneficial.
At the same time, the Italian economist argued that risk reduction in the banking sector of the euro area is already being done slowly. He recalled that banks in the Euroregion had already increased their capital reserves by 67% compared to the situation 10 years ago.
Bankruptcy of loans in Italy, Greece and Cyprus, the most failing, declared their development "
In addition to the countries mentioned above, the average level of non-repayable loans is proportional to the total amount of loans less than 5%
The transnational protection of depositors, according to Draghi, would contribute to economic and social cohesion, financial stability, because it would prevent "the risk of destabilizing and self-fulfilling prophecies" causing sudden withdrawals At the same time, according to the head of the ECB, "it would increase the effectiveness of monetary policy as it would reduce the fragmentation of the financial markets."
New fiscal instruments for the zone euro
The President of the ECB also addressed the other measures
The proposal to create the European stabilization fund for the unemployed age of the Franco-German declaration was described as "good thing".
He also expressed support for the proposed line of credit for failing banks. The joint mechanism of the existing Unified Resolution Fund, which is expected to benefit from EUR 60 billion from the European Stabilization Mechanism, should be put in place as soon as possible and should have an efficient and rapid decision-making process [19659002]. However, they want to ensure strong political control of the new mechanism. This means that important decisions will not only be in the hands of finance ministers but also national parliaments.
Draghi also missed the Eurozone budget theme, which is intensely discussed after the creation of the German office Angela Merkel Emmanuel Macron
"This instrument could provide macroeconomic support in case of economic contraction in the euro area , which helps to maintain convergence and foster the stability of national policies and the effectiveness of monetary policy, "said Mr Draghi, adding that the new mechanism should not" undermine "the incentives governments to maintain a balanced management of public finances or to undertake major reforms
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