Draghi: eurozone needs bank resolution fund
By Benjamin Fox
A eurozone banking union will need a common resolution fund, European Central Bank (ECB) chief Mario Draghi said on Monday (18 February) in the European Parliament.
EU lawmakers are currently finalising rules for a single supervisory mechanism (SSM) co-ordinated by the ECB. The European Commission is expected to table legislation for a resolution mechanism to wind up ailing banks within the coming months.
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Speaking with MEPs on the monetary affairs committee, Draghi said that the resolution fund should be financed via levies to safeguard against having to "recourse to taxpayer money."
However, the European Resolution Fund "should be backed by a public backstop mechanism" he added, to ensure that it would be "fiscally neutral over the medium term."
Although the need for a pan-European resolution fund is widely accepted among lawmakers, some countries fear it could lead to their taxpayers financing bank rescues in other countries.
Meanwhile, Draghi played down the recent diplomatic row over the exchange rate policy of the euro, dismissing as "excessive" talks of a currency war involving the eurozone, Japan and the US.
He commented that the ECB did not regard the eurozone exchange rate as "a policy target, but it is important for growth and price stability."
According to the bank's economic forecasts, the eurozone economy will fall by 0.3 percent in 2013, although Draghi indicated that he expected "a gradual recovery later this year."