EU helps protect sovereignty in globalised world: Draghi

Bloomberg

European Central Bank President Mario Draghi launched into a defense of the European Union project as a way for countries to protect their sovereignty in an increasingly uncertain global environment.
Speaking at a time when the EU is grappling with Brexit and rising populism, Draghi said the trading bloc’s institutional framework has allo-
wed its members to be free in many areas.
“In today’s world, technological, financial and commercial interlinkages are so powerful that only the very largest countries are able to be independent and sovereign at the same time, and even they cannot do so entirely,” ECB president said in a speech in Bologna. “For most other nation states, including the European countries, these two characteristics do not coincide.”
Hinting at Britain’s decision to leave the EU and anti-euro sentiment in Italy, Draghi said being outside the bloc “might lead to more policy independence, but not necessarily to greater sovereignty. The same is true of the single currency.”
The UK is set to depart on March 29, but London and Brussels are at loggerheads over the terms of the divorce deal. French central bank Governor Francois Villeroy de Galhau said earlier the prospect of a hard Brexit looks “less and less implausible.”
Draghi called on EU leaders to adjust existing institution to change in order for European “values to remain essential, fundamental.”
“This process of adjustment has so far encountered resistance because the inevitable national political difficulties always seemed to be above such need,” he said. “There should be no doubt: this adjustment will have to be as deep as the phenomena that revealed the fragility of the existing order, and as vast as the dimensions of a geopolitical order that is changing in a way that is not favorable for Europe.”
Draghi didn’t refer to monetary policy in his speech. The ECB is less than two weeks away from a policy meeting on March 7, when officials will debate whether they should respond to the slowdown in the euro area and which tools should be deployed if the downturn deepens.

ECB officials see no need to rush $800bn bank-loan call
Bloomberg

The ECB officials are in no rush to offer new loans to banks and should discuss different ways to design them before it becomes clear whether the euro-area slowdown requires a policy response.
The decision on replacing more than 720 billion euros ($800 billion) of existing longer-term lending could wait until the summer, Governing Council member Ewald Nowotny said. His French counterpart, Banque de France Governor Francois Villeroy de Galhau said policy makers would also need to make sure the funding is geared to the euro area as a whole, not specific banks or member states.
“The Governing Council will decide about this in due time,” French central banker said
in a speech in Lisbon. “We should look at the whole spectrum of possible tools, including various forms of LTRO, to decide about the recalibration of conditions and maturities.”
The comments underscore how less than two weeks before their key policy meeting on March 7, policy makers are not all convinced they should act just yet. Crucial to the debate will be the ECB’s new forecasts, although the decision on new funding for banks is looking increasingly unlikely.
Gradual normalization of policy is still desirable, Villeroy said. The ECB should pay close attention to economic data
in coming quarters to get a better sense of whether the current slowdown is temporary or structural.