The outgoing governor of the Bank of Italy, Mario Draghi, was heard today by the European Parliament to evaluate his candidacy to lead the European Central Bank. The final decision rests with the EU governments, which will meet at the European Council on 24 June.
On monetary policy, the Italian candidate reconfirmed his loyalty to the line of the EU treaties which make the fight against inflation the number one priority. “Neither the sovereign debt crisis nor persistent bank supply problems could ever divert the ECB from its goal of price stability,” Draghi said. The liquidity currently available to banks will have to be reduced in the medium term, as the current position of Frankfurt is judged by Draghi as "very accommodating" and "must not create dependency" in the market.
The head of via Nazionale also argued that the so-called Vienna Initiative on Greek debt appears to be of a "voluntary" nature. The sentence would appear to be an opening by the ECB on the restructuring of the Greek debt, a hypothesis hitherto considered taboo by Frankfurt. For Draghi, the solution to the Greek crisis necessarily passes through a European plan to relaunch competitiveness. Instead, states must pursue policies to adjust public finances.
Regarding his past at Goldman Sachs, Draghi reiterated his extraneousness to the speculation activities of the American investment bank on Greek Treasury bonds, with which Goldman had an advisory contract. Draghi recalled that he dealt with the private and non-public sector. He also cited his experience at the helm of Bank of Italy as an example of his impartiality as supervisor of the banking system.
The hypothesis of a tax on financial transactions in the European Union meets the skepticism of Trichet's successor. For Draghi it would have the effect of moving big capital elsewhere, in the absence of global coordination.
