(Excerpts from Speech of Dr. Jens Weidmannat the IIF (Institute of International Finance)
Europe Summit, Frankfurt am Main, 25 June 2015),
" If non-viable banks are kept on life support
with central bank money, they will go on to make evergreen loans to non-viable
companies - a situation which heightens the risk of future problems in the
banking system. "
"And if the liquidity is channelled towards sovereigns
that find it otherwise hard to access the markets, we run the risk of blurring
the lines between monetary and fiscal policy."
"Greece is a case in point here. The emergency
liquidity assistance (ELA) - which was originally conceived as a temporary
source of liquidity for financially sound banks in return for good collateral -
has been provided for a protracted period of time and has become the banks'
only source of funding. "
"This casts doubt on their financial solidity. The
latter is especially undermined by Greek policy decisions that have sparked
capital flight and large-scale cash withdrawals."
"...it should be clear to all the parties to the
current negotiations that the Eurosystem must not provide bridge financing to
Greece even in anticipation of later disbursements. When banks without access
to the markets buy debt of a sovereign which is likewise locked out of the
market, taking recourse to ELA raises serious monetary financing concerns."
Respecting the core principles upon which our monetary union
is built is not a matter of dogmatic German stubbornness, but a key policy
condition for long-term economic prosperity in the euro area and for
maintaining popular support for the historic project which European integration
no doubt is."
Our Comment: Hint of a fall in the euro in the short run despite Greece being factored in?
Without any risk or responsibility.
No comments:
Post a Comment