BRUSSELS – New European Central Bank powers to oversee eurozone banks will help restore confidence in the sector and revive interbank lending, its president, Mario Draghi, said on Monday.
European ministers clinched a deal last week to give the ECB powers to supervise the currency bloc’s banks from March 2014, taking the first step in a new phase of integration to help underpin the euro.
FRANKFURT — The European Central Bank left interest rates unchanged on Thursday, and markets turned their attention to ECB chief Mario Draghi’s news conference for any signs a eurozone recovery will affect the bank’s policy stance.
Abandoning its tradition of never pre-committing on future moves, the ECB said in July it would keep its rates at current or lower levels for an “extended period” — its first use of forward guidance.
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.
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.
When it comes to stress tests, especially for European banks, the one thing history suggests is the tests will be essentially stress-free, by design. Why should this time be any different?
Nonetheless, European Central Bank President, Mario Draghi Says ECB Won’t Hesitate to Fail Banks in Stress Tests.
For those of you who do not speak Draghize I offer these translations.
Despite Mario Draghi and Janet Yellen's (repeat) attempt to steal the show today, the first when the ECB reports its monetary decision (with zero real chance of announcing any change in policy considering all the furious, and failed, attempts to jawbone the Euro lower) as it faces the dilemma of deflationary pressure, record low bond yields and interest rates at record lows coupled with an export crushing Euro just shy of 1.40, and a practical impossibility to conduct QE even as the hawks jawbone a "potential" European QE to death, while Janet Yellen conducts the second part of the congress
Spanish bank Banco Santander was halted on Thursday, followed by an announcement it would raise capital. When the bank reopened its shares plummeted as much as 14%, with the Spanish stock market down about 4%. Banco Santander passed the last "stress test" so allegedly it had no need to raise capital.With that thought in mind, let's recap the ECB's love affair with stress tests that seldom find much need to raise capital.