Greek premier Papademos, former ECB vice president and architect of Greece's entry into the euro, hastened to call the president of the Eurotower to inform him of the agreement reached with the parties on austerity measures. And it was Draghi himself who confirmed the news at the press conference. The ball thus returned to Super Mario, from whom the market expects a decision on Greek debt: will the ECB now participate in the losses on Greek bonds or not? The hypothesis is that the bonds bought by the central institution could be the subject of an exchange with the EFSF, with a loss of 11 billion, in order to reduce Athens' debt. However, Draghi was not overwhelmed: "Nothing to say", he replied, specifying however that "the ECB awaits the outcome of the Eurogroup summit which will be held tonight in Brussels". But it should be remembered that “the Treaty prohibits it from contributing to the aid plan by directly providing its own funds. We will avoid any legal tricks on Greek bonds”.
The ECB, says Draghi, could instead distribute the profits obtained from Greek bonds to the governments without breaking the ban on loans to states: “The EFSF belongs to the governments. So if the ECB gives money to governments it is financing, whereas if it distributes part of its profits to its member countries as part of the ECB's capital shares, then it is not financing.
Draghi then returned to the fiscal compact, which "testifies to the willingness of European states, especially the major ones, to give up part of their budgetary sovereignty" by also changing the Constitutions. This is a first partial step towards fiscal union which "does not mean a union of resource transfers where one state earns and the other spends".
Meanwhile, in the decision on rates, Draghi has left the cost of money unchanged, as expected by the market. "We have not discussed a change in interest rate policy," Draghi added at a press conference, as he prepares for the second three-year 1% unlimited refinancing auction at the end of February. The ECB is able to "manage the increased risks associated with the expansion of collateral", Draghi then said, adding that "the banks must use the loans granted by the ECB with the Ltro program because there is no blame on the part of the market". The Central Bank confirmed its determination to continue supporting the functioning of the credit and finance system.
In terms of the economic scenario "there are signs of stabilization but risks remain", Europe closed the fourth quarter in a "very weak" manner and the recovery in 2012 will be "very gradual". Inflation is expected to remain above 2% for several months before falling below that level. And on the hot topic of work in Europe, the judgment is clear: the labor market in Europe "should see rigidities reduced and flexibility increased".
