Debt Crisis: ECB president Draghi pours cold water on bank deal after Yes vote
EUROPEAN Central Bank President Mario Draghi has poured cold water on hopes that Ireland will get a deal on its multi-billion euro bank debt following the recent Yes vote to the Fiscal Treaty Referendum.
Speaking in Frankfurt after the ECB kept its key rate at a record low of 1pc, he said it was never a given that ratification of the treaty would equal a deal on the bank debt.
“I don’t think there was any ground or any statement of a quid pro quo for this,” he said.
The decisions ought to be taken for what they are and that’s what we see,” he added while welcoming the vote and the country’s attempts to rein in its finances.
The Government is already trying to broker a deal to reduce the €30bn-plus Anglo promissory note debt with the EU/IMF/ECB troika.
Mr Draghi’s comments are not surprising given the events unfolding in Europe with Spain teetering on the brink of needing a bailout.
However, Mr Draghi was more upbeat about Ireland’s return to the bond markets to borrow money.
“One would not be excessively optimistic if one says that if Ireland continues in these efforts the return to market access is not a far distant perspective,” he said.
“It's closer than we all expected,” he said.
Mr Draghi said it was not up to the ECB to make up for other institutions' lack of action in relation to the debt crisis, suggesting that another long-term tranche of cheap loans was not on the cards for now.
The ECB calmed markets at the beginning of the year by injecting more than €1 trillion into the banking system with twin 3-year loan operations - also known as LTROs - in December and February, which helped ease banks' funding strains.
When asked about another LTRO, Draghi said many of the stress indicators were now slightly better than they were in November, just before the ECB announced the 3-year loans, but the issue was whether these measures were actually effective.
"Some of the problems in the euro area have nothing to do with monetary policy," Draghi said. "That's what we have to be aware (of). And I don't think it is right for monetary policy to fill other institutions' lack of actions," he added.
(Additional reporting Reuters)