Mario
Draghi, President of the ECB,
Vítor
Constâncio, Vice-President of the ECB,
Ladies and
gentlemen, the Vice-President and I are very pleased to welcome you to our
press conference. We will now report on the outcome of today’s meeting of the
Governing Council.
Based on
our regular economic and monetary analyses, we decided to keep the key ECB
interest rates unchanged. Owing to high energy prices and increases in indirect
taxes in some euro area countries, inflation rates are likely to remain above
2% for the remainder of 2012. They are expected to fall below that level in the
course of next year and to remain in line with price stability over the
policy-relevant horizon. Consistent with this picture, the underlying pace of
monetary expansion continues to be subdued. Inflation expectations for the euro
area remain firmly anchored in line with our aim of maintaining inflation rates
below, but close to, 2% over the medium term. Economic activity in the euro
area is expected to remain weak, although it continues to be supported by our monetary
policy stance and financial market confidence has visibly improved on the back
of our decisions as regards Outright Monetary Transactions (OMTs). At the same
time, the necessary process of balance sheet adjustment in large parts of the
financial and non-financial sectors as well as high uncertainty continue to
weigh on the economic outlook. It is essential for governments to support
confidence by forcefully implementing the necessary steps to reduce both fiscal
and structural imbalances and to proceed with financial sector restructuring.
The
Governing Council remains firmly committed to preserving the singleness of its
monetary policy and to ensuring the proper transmission of the policy stance to
the real economy throughout the euro area. As we said before, we are ready to
undertake OMTs, which will help to avoid extreme scenarios, thereby clearly
reducing concerns about the materialisation of destructive forces.
Let me now
explain our assessment in greater detail, starting with the economic analysis. Euro
area real GDP contracted by 0.2%, quarter on quarter, in the second quarter of
2012, following flat growth in the previous quarter. As regards the second half
of 2012, the available indicators continue to signal weak activity. While
industrial production data showed some resilience in July/August, most recent
survey evidence for the economy as a whole, extending into the fourth quarter,
does not signal improvements towards the end of the year.
Looking
ahead to next year, the growth momentum is expected to remain weak. It
continues to be supported by our standard and non-standard monetary policy
measures, but the necessary process of balance sheet adjustment in the
financial and non-financial sectors and an uneven global recovery will continue
to dampen the pace of recovery. The risks surrounding the economic outlook for
the euro area remain on the downside.
Euro area
annual HICP inflation was 2.5% in October 2012, according to Eurostat’s flash
estimate, compared with 2.6% in September and August. On the basis of current
futures prices for oil, inflation rates could remain at elevated levels, before
declining to below 2% again in the course of next year. Over the
policy-relevant horizon, in an environment of modest growth in the euro area
and well-anchored long-term inflation expectations, underlying price pressures
should remain moderate. Current levels of inflation should thus remain
transitory. We will continue to monitor closely further developments in costs,
wages and prices.
Risks to
the outlook for price developments continue to be broadly balanced over the
medium term. Upside risks pertain to further increases in indirect taxes owing
to the need for fiscal consolidation. The main downside risks relate to the
impact of weaker than expected growth in the euro area, in the event of a
renewed intensification of financial market tensions, and its effects on the
domestic components of inflation.
Turning to
the monetary analysis, the underlying pace of monetary expansion continues to
be subdued. In September the annual growth rate of M3 decreased to 2.7%, from
2.8% in August. Monthly outflows from M3 reflected to some extent the reversal
of portfolio shifts into the most liquid components of M3. Accordingly, the
annual rate of growth of M1 declined to 5.0% in September, from 5.2% in August.
At the same time, we have observed a strengthening in the deposit base of banks
in some stressed countries, amid improvements in investors’ confidence in the
euro area.
The annual
growth rate of loans to the private sector (adjusted for loan sales and
securitisation) declined further to -0.4% in September, from -0.2% in August. This
development was mainly due to further net redemptions in loans to non-financial
corporations, which led to an annual rate of decline in these loans of -1.2%,
compared with -0.5% in August. The annual growth in MFI lending to households
remained unchanged at 0.9% in September. To a large extent, subdued loan
dynamics reflect the weak outlook for GDP, heightened risk aversion and the
ongoing adjustment in the balance sheets of households and enterprises, all of
which weigh on credit demand. At the same time, in a number of euro area
countries, the segmentation of financial markets and capital constraints for
banks restrict credit supply. The recent results of the bank lending survey for
the third quarter of 2012 underpin this assessment.
The
soundness of banks’ balance sheets will be a key factor in facilitating both an
appropriate provision of credit to the economy and the normalisation of all
funding channels, thereby contributing to an adequate transmission of monetary
policy to the financing conditions of the non-financial sectors in the
individual countries of the euro area. It is thus essential that the resilience
of banks continues to be strengthened where needed.
To sum up,
the economic analysis indicates that price developments should remain in line
with price stability over the medium term. A cross-check with the signals from
the monetary analysis confirms this picture.
Other
economic policy areas need to make substantial contributions to ensure a
further stabilisation of financial markets and an improvement in the outlook
for growth. Structural reforms are crucial to boost the growth potential of
euro area countries and to enhance employment. Policy action is also necessary
to increase the adjustment capacity of euro area economies in order to complete
the ongoing process of unwinding existing imbalances. Visible progress is being
made in the correction of unit labour costs and current account imbalances. However,
further measures to enhance labour market flexibility and labour mobility
across the euro area are warranted. Such structural measures would also
complement and support fiscal consolidation and debt sustainability. As regards
fiscal policies, there is clear evidence that consolidation efforts in euro
area countries are bearing fruit. It is crucial that efforts are maintained to
restore sound fiscal positions, in line with the commitments under the
Stability and Growth Pact and the 2012 European Semester recommendations. Full
compliance with the reinforced EU fiscal and governance framework, including
the rapid implementation of the fiscal compact, will send a strong signal to
markets and strengthen confidence in the soundness of public finances.
The
Governing Council takes note of the European Council conclusions on completing
Economic and Monetary Union, adopted on 18 October 2012. In the context of
measures to achieve an integrated financial framework, it welcomes in
particular the objective of agreeing on the legislative framework for a Single
Supervisory Mechanism (SSM) by 1 January 2013 with a view to the SSM becoming
operational in the course of 2013.
We are now
at your disposal for questions.
* * *
Question:
Given what you just said about the condition of the economy, and what you said
in your speech yesterday, do you expect your projections for the economy to be
revised downwards next month, and did you discuss a cut in interest rates?
Also,
considering the SME lending survey of last week, would you consider a further
LTRO or possibly the purchase of corporate bonds or corporate ABS?
Draghi: We
will certainly monitor developments in the euro area economy and these
developments will be taken into account in the December staff projections. Certainly
the outlook is being revised; as you know, the European Commission has released
its forecast, and there is a picture of a weaker economy, as I had the chance
to say yesterday. So all this is bound to be taken into account in the staff
projections in December.
On interest
rates, we always discuss all our instruments of monetary policy but, as I just
said, the Governing Council decided to keep interest rates unchanged. We have
not discussed what we are going to do next year in terms of monetary policy.
Question:
Is the ECB satisfied with the degree of relief that the mere announcement of
the OMTs has already brought to the markets? And in the current environment
would you then theoretically be happy to never buy a single bond, or do you
think that the rest of the euro area would benefit from a Spanish bailout
request by giving you the opportunity to show your resolve and thereby clear
the impaired transmission mechanism?
My second
question is on interest rates. I know you said you did not make a decision on
the future main refinancing rate. Governing Council member Ewald Nowotny said
that, for him, a negative deposit rate, should you decide to cut interest
rates, doesn’t appear to be a realistic prospect to him. Is that an assessment
that is shared in the Governing Council? Thank you very much.
Draghi: We
did not discuss matters related to your second question.
On the
first question, we certainly take note that since the OMT announcement there
has been a series of market improvements that I will just quickly list. First
of all, we have a return of flows from the rest of the world, in particular
from US money market funds, which was +16% in September, month on month, for
the third consecutive month since the announcement. So, even though overall it
continues to be a small exposure with respect to euro area banks and with
respect to what it was at the beginning of last year, it is going up. Also,
this form of lending has shifted considerably from secured to unsecured lending.
Only 30% was secured, and this is the lowest figure since March. And this is a
positive sign. Another positive sign is that there have been some limited
renewed US dollar bond placements by euro area institutions. There has been a
moderate pick-up in corporate issuance. As I had the opportunity to mention on
other occasions, there have been a few issues of sovereign bonds by Ireland and
Portugal. The funding plans of two large sovereigns like Italy and Spain are
quasi-completed if not completed. And the share of foreign holdings of these
bonds issued by Spain and Italy has gone up, which is also something that we
had not seen for a while. Finally, the TARGET2 balances figure, which is
another sign of how imbalances in the euro area are developing, has been stable
now for two or three months, which is also another good sign. So all this is
encouraging, and by itself this has certainly been equivalent to a further
expansion of monetary policy, because financial market conditions are
considerably easier now than they were two or three months ago.
On the
Spanish request, I will decline to make any comment. It is entirely in the
hands of governments to decide about this. The conditions of the OMTs are clear
and we stand ready to act. OMTs are, as you know, a fully effective backstop
that is devised to remove the tail risk for the euro area, and we stand ready
to act.
Question: I
do need to press you again on Spain, unfortunately, because Spanish bond yields
have gone up again – you are nodding – the longer Mr Rajoy hesitates. Would you
like Spain to ask for aid?
And my
second question is: Do you consider financing conditions appropriate across the
euro area right now, or do the current Italian and Spanish spreads still
contain a redenomination risk? Thank you.
Draghi:
Again, you keep on pressing, but I will keep on answering in the same way. It
is entirely up to Spain, and to the Spanish Government, to take this decision. It
is not up to the ECB. As I have said many, many times, the ECB has produced the
OMTs. The OMTs are a fully effective back-stop mechanism. They are a device to
remove tail risk, while – at the same time – not removing incentives for fiscal
discipline, and delivering price stability. That mechanism is in place. And the
conditions for accessing that mechanism are also very, very clear. Now, for the
rest, the ball is now completely in the governments’ side of the court, not in
that of the ECB.
With
respect to the financing conditions, I think that, rather than focusing on the
levels of the spreads or interest rates, one should look more at the
fragmentation of the euro area. So, when we talk about financing conditions,
for example at financing for small and medium-sized enterprises (SMEs), as was
asked in the preceding question, when we are asked whether we are satisfied
with the financing conditions, the answer is: no, we are not satisfied at all. We
are observing a fragmentation of the euro area, a re-nationalisation of the
banking systems, differences in the cost of funding that go beyond the fundamentals.
Therefore, our priority now is to repair the monetary policy transmission
channels, so that our monetary policy will actually deliver, will be able to
deliver price stability.
Question :
… you have always said that you can only fix the transmission mechanism if the
OMTs are activated without the Spanish request. Then…
Draghi: No.
OMTs will help to fix the transmission mechanism, but there are many other
reasons why the transmission mechanism is not working. First and foremost among
them is the lack of appropriate economic policies that are now in the process
of being fixed. But let us not forget how we came to find ourselves in this
situation. We know that there was a situation marked by bad equilibrium, where
– until three months ago – we had self-fulfilling expectations, self-feeding
expectations. At the same time, the countries concerned found themselves in
this bad equilibrium because of policy mistakes of the past, or because of the
lack of policy altogether. So the origins of the fragmentation of financial
markets in the euro area are basically to be found in policy mistakes, and
these have to be corrected.
Question :
Mr Draghi, the Spanish Prime Minister, Mr Rajoy, has said that one of the
reasons why he is taking his time with the request for a European bailout is
because he wants assurance that the ECB’s intervention will actually bring down
his country’s borrowing costs. Can you give Mr Rajoy this assurance today?
Draghi: No.
I think I have answered this question before. First, there is a general
statement. The way the OMTs have been designed foresees, as we have discussed
many times, that, as a necessary condition, the country should sign up with an
ESM programme, and that a role for the IMF would be actively sought and would
be welcome. But this is the necessary condition – it is not also the sufficient
condition. So, the Governing Council will take its final decision in total
independence. And in so doing, it cannot give any assurance ex ante. Because we
have to make our monetary policy assessment, we have to make an assessment of
the actual state of fragmentation of the financial markets. So, I think there
is not any automatic quid pro quo. We know that the mechanism is a fully
effective back-stop, and it is in place. But it is up to the countries to take
all the right steps to ensure that this mechanism can be activated.
Question:
My second question is on Greece. Last night, Greece managed to approve another
austerity package. Is this enough and would the ECB now be willing to help make
Greece’s debt burden more sustainable, and if so, what could you do?
Draghi: The
ECB and the Governing Council certainly welcome the outcome of the vote
yesterday. It is a very important step that the Greek government and the Greek
citizens have undertaken. It really represents progress, especially if one
compares the situation with what it was a few months ago. Another vote is
expected on the budget on Sunday. The governments will discuss the Greek
situation at next week’s Eurogroup meeting. The ECB ensures price stability and
wants to repair monetary policy transmission channels, but it cannot undertake
monetary financing.
Question:
Next week Greece will have to refinance €5 billion of Treasury bills and that
is likely to be done again through emergency liquidity assistance. How much
longer is the ECB going to tolerate that sort of behaviour and could you also
please explain why emergency liquidity assistance is not a form of monetary
financing?
Second, do
you see evidence that this sort of funding is being used increasingly
elsewhere, for example in Cyprus? Are you worried about this, especially in the
light of very tight fiscal policies?
Draghi: We
consider this type of financing to be temporary. We do not consider emergency
liquidity assistance to be monetary financing; it is one of our instruments.
We are
keeping a close eye on developments in Cyprus, but it is ultimately up to the
government to respond to this situation, not the ECB.
Question:
My first question is on inflation expectations. After OMTs were announced in
September, we saw a very strong increase in gold prices, with €3 billion going
into gold ETFs and ETCs just in that month. Is that a sign of speculation or of
increased inflation expectations?
My second
question relates to unit labour costs. You said that there has been visible
progress in the correction of unit labour costs. Most economists say that unit
labour costs are not a good way to measure competitiveness because you have
this unemployment productivity. They say that one should look at the GDP
deflators because there we do not really see any great progress being made. Are
they right or wrong?
Draghi: The
increase in gold prices is exactly that. Why this should depend on OMTs is a
mystery to me. We are constantly looking at inflation expectations over several
horizons, and no matter what horizon we look at, we continue to see that they
are solidly anchored. To ask whether the price of a specific asset forecasts an
increase in the inflation rate is always a very risky question. You see asset
prices going up and down, and to infer from an increase in the price of one
asset that inflation will go up, and that inflation will go up because of OMTs,
which haven’t created any liquidity yet, is really a very rash assumption.
With regard
to the improvement in labour costs, yes, there has been an improvement in unit
labour costs in several countries. This may certainly be partly the consequence
of an increase in productivity, which, as the economists you mentioned
correctly say, could be cyclical. However, we also observe an improvement in
the current account balances of these countries. You are also right when you
say that, in spite of the changes in unit labour costs in some countries, we do
not observe comparable changes in the GDP deflator, which may be due to other
reasons. For example, in one country unit labour costs have fallen, but there
has been no change in the GDP deflator or HICP inflation rate because energy
prices remain very high. The other reasons have more to do with the inertia
that the components of value added show in adjusting to the new situation.
Question: I
have a completely different question concerning collateral framework rules. I
just want to know how exactly you want to make sure that national central banks
might not again bend the collateral framework rules according to their needs. How
do you want to make sure that the credibility of the ECB as a risk manager will
not be hurt?
Draghi: Let me first make a clarification, because there has
been a lot of press on this point in the last week. The first clarification is
purely factual: the nominal amount of collateral being posted was not EUR 80
billion, but EUR 10 billion. The second clarification is that all this had no
impact at all on our lending. So nobody received more than they should have
received because of this mistake – because it was a mistake. The impact of this
is zero, but we take this mistake very seriously. And so the Governing Council
has mandated the Eurosystem Audit Committee, which is chaired by Governor
Liikanen, to assess the implementation of the collateral framework in the
Eurosystem and we will have an initial assessment of this at our next Governing
Council meeting and then we will discuss whether further analysis or further
action is needed and I will keep you posted on that.
Question: I would like to go back to the economic outlook.
You have mentioned recently that there are some deflationary risks in some
European countries. You have talked about unemployment being deplorably high.
Why aren’t you cutting rates, why aren’t you considering some kind of
quantitative easing? Isn’t that an appropriate role for monetary policy?
And my second question, back to the Greece issue: You said
you won’t do anything that is monetary financing, but are there things you
could do that would not cross that line? Specifically, could you sell your
bonds at cost to Greece or to the ESM? Could you somehow redirect your profits
back to Greece? Do you have options or are you just telling the governments that
you have no role in this whatsoever?
Draghi: Well, let me first just point out that I never
mentioned deflation. Deflation is a generalised fall in the price level across
sectors and it is self-sustaining. And so far we have not seen signs of deflation,
neither at the euro area level nor at country level. We should also be very
careful about not mixing up what is a normal price readjustment due to the
restoration of competitiveness in some of these countries. They will
necessarily have to go through a re-adjustment of prices. We should not confuse
this readjustment of prices, which is actually welcome, with deflation.
Basically, we see price behaviour in line with our medium-term objectives. So,
we see price stability over the medium term. Also consider that monetary policy
is already very accommodative, consider the very low level of interest rates
and that real interest rates are negative in a large part of the euro area, and
consider how many measures we have taken in just one year: several cuts in interest
rates, halving the reserve ratio, two LTROs for a gross amount of EUR 1
trillion and so on and so forth. We have gone through this together many times,
so I will not repeat it. And then we had the OMT announcement, which by itself
produced an easing of financial market conditions. But we will certainly
continue monitoring economic activity and we stand ready to act. As I said
before, we stand ready to act with the OMT once the prerequisites are in place,
but we also stand ready to act with the rest of our standard monetary policy
instruments.
On Greece, we certainly cannot do monetary financing. I
repeat this. On the profits of the SMP holdings, we already decided this at the
time of the first PSI because what happens is that these profits naturally
accrue to the central banks that are members of the Eurosystem. And then the
central banks, in their independence or according to their legislation, will
transfer these profits to the governments and then it is up to the governments
to decide whether they want to re-use these profits for Greece. And the
governments actually committed themselves to do so at that time.
Question: So you’re done, the ECB is done on Greece?
Draghi: The ECB is as you say, by and large, done.
Question: A question still relating to SMP profits. I am
just trying to make a fair estimate of the scale of this profit, assuming that
you have 60 billion on your balance sheet, bought at 75% of its face value, and
get interest income of 5% over five years; that would mean 30 billion profit.
Is that a fair estimate of the profit of the SMP holding?
Draghi: I am very sorry but I am not in a position to answer
this question. I can provide you with an answer later.
Question: Provided that it is being paid back in full. Is it
a fair estimate?
Draghi: I do not have an answer now.
Question: Two questions. First of all, just again on
inflation. You said today that the risks were balanced on the upside and the
downside. I think when you were talking behind closed doors to German Members
of Parliament, you said the other day, in the text of the speech that was
released anyway, that there was, if anything, a downside risk. Could you just
clarify, which is it? Is it balanced or is it a downside risk?
The second question is on LTROs. Your neighbours in the
tower block just over there in Commerzbank said, this morning, that they plan
to hand back their LTRO funding at the end of the year, as soon as they can,
basically. This is essentially because they do not seem to be able to find
anything useful to do with it; it costs them 0.75%; they are just parking it
with the Eurosystem at 0%. Is that a worrying sign? Should these banks be
finding companies to lend that money to, or are you relaxed about a sudden end
to all these LTRO borrowings?
Draghi: On inflation, I think I have always said, at least
in the recent past, that risks are broadly balanced because, on the one hand,
you have the downside risks that come from the weak level of economic activity
and high unemployment. On the other hand, you have the upside risks that come
from energy prices and the widespread use of indirect taxation, especially VAT,
by countries that need to consolidate their budgets. So, the two things, by and
large, balance themselves and this is the assessment that I would still
maintain today.
On the LTRO: no, it is not necessarily a matter of concern.
Actually, in a sense, it is the best response to all those who were saying “you
are flooding the world with liquidity”; now, you see that this is not
happening. You see that, in fact, money is coming back, and the balance sheet
of the ECB will shrink down correspondingly. No consequences on inflation had
followed since the time when we decided on the LTRO, way back in January/December
last year. Whether banks return LTRO because they do not lend it because of
risk aversion or because credit demand is weak, I am not in a position to say
today. But, certainly, these must be the two reasons: either they are fearful
to lend – and here we are talking about banks that do not have capital
constraints of course– so, assuming that they do not have any capital
constraints, banks do not lend because either the risk aversion is too high or
because there is no demand. This could be a sign of either of the two factors.
The important thing with the LTROs was that, again, we removed tail risks
coming from the lack of funding that would have happened in the first quarter
of this year. The objective has been achieved.
Question: Did you try to saddle the “OMT horse” from the
other side? You said the OMT was there to avoid extreme scenarios, extreme
risks. Could you foresee a scenario, an extreme scenario, where the OMT would
be triggered without the conditionality in place, or without parts of the conditionality
in place, because, as I said, it might be too extreme a scenario?
The other thing is, after yesterday’s speech, and also after
the statements today, the markets are taking the view that we are going to see
a rate cut next time around. Would you say that the markets are grossly
misguided?
Draghi: Well, on the second question, as you know, I cannot
comment.
On the first question, you are asking me: could there be an
OMT without conditionality? The answer is no.
Question : Mr Draghi, I have a question concerning the euro
zone and the United States, where we just had the elections. Under the pressure
of the markets in Europe, the reform process started two years ago in Italy and
in Spain. In the United States it is said that there the reforms could not
start. We are all wondering whether they will start now. What do you think, in
your eyes, is Europe’s potential to catch up with the United States? Do you
think that Europe can have a comeback, a sort of comeback, in the near future?
Draghi: What I can say is that both the euro area as a whole
and the individual countries forming the euro area – and I would not have made
this statement a year ago, by the way – have a fundamental position, which is
way more balanced than the United States, but also than other countries: Japan
or the United Kingdom. The euro area has a current account balance which is
basically in balance – zero – that, both as corporate debt and household debt,
is relatively low all over the euro area; saving ratios are high; and as I was
saying before, unit labour costs are on their way down. The fiscal
consolidation that has taken place all over the euro area is amazing. When we
look at the other parts of the world, it is not so amazing at all. So,
deficit-to-GDP levels are on their way down everywhere, even in the countries
which have the highest ones. So, all this basically poises the euro area for a
recovery, which should be, or probably is going to be, slow, gradual but also
solid, looking exactly at these fundamentals. So, what we have to overcome now
is the sort of fragmentation; that is our major challenge ahead and I think we
have made, collectively, significant progress on that route.
Question: Mr Draghi, you said before that that the monetary
policy stance is very accommodative at this time and you mentioned the bunch of
measures taken in the past year. Is this the time, or is this absolutely not
the time, to think about the point when you will abandon this strategy? Do you
prepare for it, maybe in your mind, or is it not something you are thinking
about at all at the moment?
Secondly, through the supervisory mechanism that you
welcome, the ECB will soon be giving a formal legal opinion, but could you give
us your opinion now, if you have one, on the information that Paris and Berlin
are in favour of a woman chairing this authority.
Draghi: On the first question: we look at price stability
and we will decide on our strategy and the timing of our exit depending on how
we see price stability over the medium term. So far, we see no reason to change
our monetary policy, looking at price stability over the medium term.
On the second point: gender considerations are close to our
hearts and minds. That goes for both the Executive Board and me personally. We
understand that the European Parliament, with whom we have always had excellent
relations, has valid concerns about this, and our hearts and minds are really
open with respect to this. This has to do with my answer to your point about
the supervisory mechanism and who might chair it. Gender concerns are very
important and, actually, the ECB has been quite active on this. Let me just go
through some of the things we have done in order to show you how we all care
about this. We have been very active as far as our recruitment success rate is
concerned and we are doing fairly well at staff level. We are not doing well at
management level, so we have to improve in that respect. However, we have
launched a series of actions which I think will bear some fruit here. We know
we have to improve at management level.
Question: You said the original financial fragmentation was
a policy mistake and that structural reforms are needed. Are you satisfied with
the reform path and the reform speed you see in Spain and Italy, or would you
expect more and faster reforms?
Draghi: I think this is an important question. In answering
it, I would ask you not to take a medium-term, but a short-term perspective.
Compare the situation today with how it was even less than a year ago and the
conclusion is unavoidable: there has been substantial progress. Is the task
finished? Not at all. There is a lot more to do, obviously on the fiscal
consolidation path, but – and this is more and more significant as time goes by
– also on the structural reforms.
Question: But is it happening fast enough?
Draghi: Again, it depends on your perspective, because if
you compare the current speed of reform with the speed of reform in those
countries in the previous five years, then you are bound to say that it is very
fast. But if you are asking me whether it will ever be fast enough, I will put
it this way: the faster it is; the sooner financial market conditions in Europe
will return to normal.
Question: I will take your perspective, because you said the
main problem was the lack of structural reforms and that you cannot solve the
problem – it is up to the countries to do so. So, from your perspective, is the
speed of reform fast enough for financial conditions to return to normal?
Draghi: It does not matter what speed we would like to see,
as it is ultimately for the citizens of these countries to decide on the speed.
They should know that these structural reforms have to be made. They are
unavoidable and necessary. Eventually, prosperity, growth and job creation will
come out of them. The actual pace of the reforms is a combination of many
factors but, first and foremost, the political realities of these countries. As
I said, the sooner this process is brought forward, the quicker the euro area
will get back to normal in the euro area because – and let us not forget this –
the financial conditions in the euro area started to worsen after the financial
crisis, but this was because very unsatisfactory policies were found to be in
place in many countries.
Elisabeth Ardaillon-Porier, Director Communications,
announces that the President will now make an announcement regarding the euro
banknotes and afterwards a video will be shown.
Draghi: But before I do, I just want to go through the
partial answer I gave about gender diversity, because I think it is actually
quite important that I do give some time to this. As I said, we are doing very
well at staff level but we should improve at management level. In order to
achieve this, we have launched a number of initiatives to encourage female
staff to pursue management functions, and to support them in this. These
initiatives include mentoring, the diversity task force, making use of external
counsellors, enhancing diversity in recruitment panels, and child-minding
facilities. As I said before, my impression is that these initiatives are
bearing fruit.
Now, coming to the banknotes; let me read the statement. I
am pleased to be able to announce that the European Central Bank and the
national central banks of the Eurosystem are to introduce a second series of
euro banknotes. Called the “Europa” series, it will include a portrait of
Europa – a figure from Greek mythology and the origin of the name of our
continent – in the watermark and the hologram. The new banknotes will be introduced
gradually over several years, starting with the €5 banknote in May 2013.
The Europa series has benefited from advances in banknote
technology since the first series was introduced over ten years ago. Its
security features have been enhanced, which will help to make the banknotes
even more secure. Three new features – the portrait watermark, portrait
hologram and emerald number – have been unveiled today.
The first series will initially circulate alongside the new
banknotes, but will gradually be withdrawn and eventually cease to be legal
tender. The date when this occurs will be announced well in advance. However,
the banknotes of the first series will retain their value indefinitely and can
be exchanged at the Eurosystem national central banks at any time.
The ECB will be revealing the details of the new 5 euro
banknote in two phases starting today with three of the new security features
that it contains. This will allow the public to start familiarising themselves
with this three new security features. Also, in order to raise public awareness
of this series, the Eurosystem will be conducting an information campaign
across the euro area in 2013. I would also like to take this opportunity to
thank all the Eurosystem staff who have been involved in the preparations for
the new banknotes. And now I am pleased to present a short film that is showing
three of the new security features embedded in the new five euro banknote.
Question: President asks: What is the sense of this movie?
Mr Vice-President, please answer the question.
Constâncio: I am just considering it like you are, because I
just saw the film for the first time. In fact, the purpose is to show the three
new security features that we decided to reveal today. I would like to take
this opportunity to say that on 10 January 2013 the full new five euro banknote
will be revealed at an event in the archaeological museum here in Frankfurt. We
will also show the 2000-year-old Greek vase that belongs to the Musée du Louvre
– the vase from where the portrait of Europa was taken. So, there will be an
exhibition and all the other security features of the note will be revealed in
full. Today, it is just three features, and that’s what was shown in the film:
the hologram; the watermark; and the number five changing colour.
European Central Bank
Directorate Communications
Press and Information Division
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