Draghi: EU Needs Credible Bank Refunding Mechanism

The endless Italian bailout story that keeps on giving, has just given some more. It turns out Italy's insolvent Banca dei Monte Paschi, which has been in the headlines for the past month due to its role as political leverage against the frontrunning Bersani bloc, and which has been bailed out openly so many times in the past 4 years we have lost track, and whose cesspool of a balance sheet disclose one after another previously secret derivative deal on an almost daily basis, can now add a previously unannounced bailout by the Bank of Italy to its list of recent historical escapades.

Editor’s Note: The following post comes to us from Eilis Ferran, Professor of Company and Securities Law, and Valia SG Babis, both at University of Cambridge. Euro Area banks need credible financial backstops.

European Central Bank President Mario Draghi, in a speech in Budapest, stressed that central bank independence is key for credible monetary policy.

With the ECB's rate cut decision already wreaking havoc on logic and common sense everywhere, pushing the EUR much higher, and the USd and JPY lower, one can't wait just what non-standard measures Mario Draghi will come up with next to send the EUR to record highs, providing a boon to German IMports. Wait, but the GDP calculation said that net imports are... oh, nevermind.

Today the ECB left interest rates unchanged and hinted at future bond purchases but also warned "Governments must stand ready to activate the EFSF/ESM". The Financial Times has details in Draghi prepares for fresh bond buying

The president of the European Central Bank, Mario Draghi has warned of growing downside risks to the European Union's economic outlook says and a credible signal is needed to restore confidence.

BRUSSEL