Draghi: EFSF, ESM Big Enough For Expected Risks
BRUSSELS (MNI) – The Eurozone’s bailout funds are big enough to
confront the expected risks facing the single currency area, European
Central Bank President Mario Draghi said on Thursday.
“Frankly right now I think that the ESM and the EFSF, with the new
modalities, are enough, are adequate, to cope with the risks, the
contingencies we can envision now,” Draghi said at his monthly press
Eurozone governments last week agreed that the bailout funds should
be allowed to buy bonds from “virtuous” governments facing “unfair”
market pressures using the “existing mechanisms,” so long as the
governments agree to certain conditions.
The ECB president expressed a critical view of the idea that the
permanent bailout fund, the European Stability Mechanism, should be
given a banking license so that it could tap the ECB for more money to
aid troubled Eurozone governments.
“I don’t think there is anything to gain destroying the credibility
of an institution by asking it to behave outside the limits of its
mandate,” he said.
Draghi reiterated that the ECB stands ready to act as an agent for
the ESM and EFSF in any market operations they conduct. He noted that
the EU leaders had agreed that sovereign bond purchases by the bailout
funds would be conducted “in a flexible and effective way.”
And he added, “we should not forget that everything – the ESM
recapitalisation, the stepping in of the EFSF or ESM on the primary or
secondary market – is subject to conditionality. There is nothing
without conditionality. Conditionality is what gives credibility to
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