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What’s your assessment on the Single Resolution Mechanism? How’s the whole process right now and what would be a reasonable timeline for the process to end?
What counts for me is that there’s an agreement with the European parliament no later than April, when the Parliament closes for elections. I know that there are many detailed discussions here and there and what can go in what direction, but from my perspective the key is to have an agreement, because we need to make progress with the Banking Union, the ECB has said often that as a complement to the single supervisor they need the Single Resolution Mechanism and that requires a Single Resolution Fund. It’s important to have it in place so that at the time ECB has done the quality asset review and EBA the stress test, if there’s a need for money – and I don’t expect much – there’s a system in place that can respond to whatever problems that come up.
Can we get to a point where we have the stress tests made without the resolution mechanism agreed yet?
That’s exactly what needs to be avoided.
How credible would the stress test be then?
We could find solutions, because many countries are able to come up with money if needed, and other countries can borrow from the ESM with a macro-economic adjustment or a Spanish type banking restructuring programme.,
But how’s that a good option? Asking the governments to borrow from the ESM and raise the public debt?
It’s not the best option and that’s why I hope we find a better system. And everybody involved has in mind that by April we should have a conclusion.
Can the European elections put on hold some crucial topics like the Banking Union and Portugal’s exit from its programme?
They are never put on hold and certainly not due to elections, because these are important issues.
But can the outcome of the issues be affected?
It could be actually quite positive to have this deadline in April, so that may force everybody to find a compromise.
Jean-Claude Trichet said in January that the ESM is the farthest Europe will go in terms of eurobonds. Do you agree?
For the foreseeable future, yes. I would never rule out something 20 years from now, but as many politicians in northern Europe have said, eurobonds can only become available at the end of a long process. And the process means everybody complying with our fiscal and other surveillance rules, also being confident that the centre, which is the Commission, can intervene when a country is not complying with the rules. When all this is credibly in place, then eurobonds might be feasible. But it’s a very long process, I don’t think I’ll see the final point of it before my retirement. And I don’t intend to retire early.
How can we be talking about European solidarity and at the same time see things like Germany and the Bundesbank questioning the OMT?
What we are doing with the EFSF and ESM is solidarity, we have disbursed in the last three years €222 billion to five countries at low interest rates, so this is solidarity in a crucial moment. And what happens with OMT we have to wait and see. The German constitutional court didn’t say anything that makes OMT impossible, they have a clear view, but they are asking the European Court of Justice for their view and I think it’s the right approach because only the European Court can deal with a European institution.
If they give the OK without restrictions, will it be harder for precautionary programmes from the ESM to pass on some national parliaments, like Germany and Finland?
We are dealing with several parliaments and I cannot predict which parliament will say what in the end. This is complex, but it’s not relevant in the short run, because the European Court will take some time to decide.