Mario Draghi, candidate designate for the European Central Bank presidency, told Economic and Monetary Affairs Committee MEPs on Tuesday that the ECB must not be diverted from its primary goal of price stability and that he would use the European Parliament venue to strengthen the ECB’s accountability to citizens. Voluntary involvement of private investors as part of a solution to the Greek crisis is workable, he added.
In a two-hour hearing held by the committee to form its opinion on the suitability of Italy’s central bank governor to succeed Jean-Claude Trichet, Mr Draghi fielded questions on his vision for the ECB, the best model for a revamped economic governance system, the best way out for Greece, and also on his past as vice-chairman of the Goldman Sachs investment bank .
The committee will vote its opinion on Wednesday morning, and Parliament as whole will be asked to give its opinion on 23 June. Parliament has a consultative role in nominating of the ECB president and holds hearings with him or her at least every quarter.
The way forward for the ECB
Mr Draghi repeatedly defended the ECB’s hawkish attitude towards inflation, saying that nothing, not even a sovereign debt crisis, should divert its attention from this. On the other hand he also recognised that the ECB’s role in assessing risk and participating in monetary policy had grown. Asked by MEPs about this role, he insisted that the ECB had neither lost its independence, nor was overstepping its mandate, provided it did not enter the field of politics.
MEPs focused many of their questions on the most immediate issue of the day: Greece. Mr Draghi stuck to Mr Trichet’s stance of “no default”, but nonetheless accepted that private investors could be included in the picture of a solution for Greece provided that this was “entirely voluntary”, as had been the case in 2009 for some central and eastern European countries. “The cost of a real default will exceed the benefits and will not address the root causes. Moreover we do not know what contagion effects it will have”, said Mr Draghi, quashing arguments that the main reason for his stance was that the ECB was too exposed to Greece’s debt.
New economic governance
On economic governance, Mr Draghi called for efforts to strengthen and build upon what already existed rather than look too far ahead. “The economic governance legislative package can be more ambitious. We need more automaticity as Parliament is rightly pushing for and more sanctions”. To a question about a possible EU finance minister, Mr Draghi replied that there was not enough integration for this step. For the same reason, he also said that Eurobonds were currently “a step too far”.
A few MEPs asked Mr Draghi about his past involvement with Goldman Sachs and whether this could negatively affect his perceived integrity as ECB president. Mr Draghi vehemently defended himself, saying that he was not involved in the bank’s work with governments and that his track record since then in clamping down on the banking sector and warning about the build up of risk proved that he would not be in the pocket of the financial industry.