The European Parliament and the European Council have reached a political agreement on the directive for the resolution and restructuring of banks at national level, the first step towards a European crisis management system. The directive, aimed at managing bankruptcies in an orderly manner, concerns the so-called "bail-in" rules, which establish the principles of the burdens that fall primarily on shareholders and bondholders according to a certain order of priority. The European Parliament specifies that the rules on the "bail-in" will enter into force on 2016 January 2015, while those on the resolution on XNUMX January XNUMX.
DRAGHI: THE BANKING UNION IS NOT ENOUGH
Meanwhile, the president of the European Central Bank, Mario Draghi, underlined how the banking union is a very important step, but "not a panacea for the stabilization of the Eurozone and the elimination of financial fragmentation: progress is needed in the others". unions' to strengthen the architecture of the economic and monetary union”. Draghi's reference is to the budget union project.
ECB: ITALIAN ACCOUNTS AT RISK
Furthermore, in its latest monthly bulletin, the ECB recalls that Italy is among the five countries in the euro area considered by the European Commission to be "at risk of non-compliance" with the commitments to consolidate the public finances. This is due to public debt, which according to Brussels could require additional correction measures equal to 0,4 points of GDP. However, the central institute underlines that Italy has responded to these concerns with privatization projects and the spending review.
In terms of the deficit-GDP ratio, however, the ECB believes that Italy will not be able to hit its targets: "The figure for 2013 should be 3%, against the target of 2,9% set in the program update of stability. The deviation is mainly attributable to a deterioration in macroeconomic conditions, despite the fact that further consolidation measures amounting to 0,1% of GDP were adopted in October to ensure that the deficit does not exceed the 3% reference value. The draft programmatic document, according to the report, envisages for 2014 "a deficit/GDP ratio of 2,5%," compared with the target of 1,8% set in the 2013 stability program update.
RECOVERY STUFFED BY UNEMPLOYMENT AND AUSTERITY
As for the Eurozone, the ECB expects a slow-motion economic recovery, held back by high unemployment and austerity policies. "Looking forward - reads the document - in 2014 and 2015 GDP should record a slow recovery, in particular due to a certain improvement in domestic demand", thanks to the accommodative monetary policy: "Economic activity should also be favored by a progressive strengthening of the demand for exports”.
Secondly, "the overall improvements observed in the financial markets since last year are being passed on to the real economy, as are the progress made in fiscal consolidation" and real incomes have recently benefited from lower inflation relating to the energy component. However, concludes the ECB, “unemployment remains high in the euro area and the necessary balance sheet adjustments in the public and private sectors will continue to weigh on the economy”.
LOW RATES FOR A LONG TIME
Lastly, the Eurotower reiterates that in the euro area "the underlying pressure on prices will remain contained in the medium term": expectations "continue to be firmly anchored to the Governing Council's objective", but "a prolonged period of low inflation is looming ”. For this reason, "monetary policy will remain accommodating as long as necessary": interest rates will remain "at or below current levels for a prolonged period of time". As regards the conditions of the money market and their potential impact on the monetary policy stance, the Governing Council is "monitoring trends closely and is ready to consider all available instruments".
