With Mario Draghi, the president of the European Central Bank, stepping down at the end of October, the ECB faces a credibility problem with doubts on whether his replacement will be up to the job. While according to Ferdinando Giugliano (Bloomberg), as long as question marks remain over who will be the next president, the effectiveness of the ECB will be limited, he does believe that Draghi can show that he still controls the message.
The ECB is to offer a fresh round of ultra-cheap loans to banks so they can keep lending at favourable rates to families and businesses. It is also envisioning, a new cut in its negative deposit rate, which banks pay for parking their money with the central bank. Yet, according to Giugliano, the ECB is still looking powerless when it comes to controlling risks to the single currency that come from outside the domain of monetary policy.
BETTER FINANCE takes issue with the notion of a powerless ECB. For years now, BETTER FINANCE’s Slovenian member organisation, VZMD, has been fighting a courageous uphill battle for the rights of non-insider bank investors, following the harshest of bail-ins of the subordinated bondholders of 6 Slovenian banks in 2013, as part of the EU’s BRRD (Bank Recovery and Resolution Directive) that only entered into force on 1 January 2016.