Italy seeks ECB board seat for infrastructure investment push

Bloomberg

Italy will seek a seat on the European Central Bank’s Executive Board and use it to push the institution to buy bonds to fund infrastructure projects, according to a senior lawmaker in the coalition government.
European Union leaders are preparing to start negotiations over the next suite of top policy positions including a replacement for ECB President Mario Draghi. His departure at the end of October could leave Italy without a place at the heart of the central bank for the first time in the currency bloc’s history.
“We must have a seat on the board — it’s impossible that an economy the size of Italy’s shouldn’t have one,” Claudio Borghi, economic adviser to Deputy Prime Minister Matteo Salvini, said in an interview. “It’s also important for us to have a seat because we’re going to make proposals on governance.”
Prime Minister Giuseppe Conte will aim for a seat on the six-member board, with Salvini’s League likely to play the lead role in picking a candidate, said two Italian officials who declined to be named discussing a confidential issue. Borghi said the League wants ECB to play a bigger role in stimulating sluggish econo-mies by financing investment. He heads the budget committee of the lower house, while League is the dominant force in the populist coalition after it trounced its partner, the Five Star Movement, in European Parliament elections at the weekend.
“This would be a kind of quantitative easing for infrastructure,” said Borghi. “The European Investment Bank would issue bonds to finance public works, and the ECB would buy them.”That proposal is likely to be controversial at the central bank, which is barred by law from funding governments and which has had to fight court cases over previous bond-buying programs. One of the key critics of any move toward monetary financing is Bundesbank President Jens Weidmann, who is a candidate to succeed Draghi.
Borghi said the topic should be discussed in the first meetings of the new board and in the first sessions of the new European Parliament.
The rightist League’s new strength means it will likely play a dominant role in shaping Italy’s strategy on a host of upcoming EU jobs such as the heads of the council of leaders and the European Commission. Leaders will kick off the horse-trading at a summit in Brussels on Tuesday, with current Council President Donald Tusk already calling for a “geographical balance.”

‘ECB needs time to assess impact of negative rates’
Bloomberg

The impact on banks from negative rates mustn’t be exaggerated and the European Central Bank needs time to assess the policy, French central bank Governor Francois Villeroy de Galhau said.
In comments suggesting he’s softening his push to rethink the squeeze on banks from sub-zero rates, Villeroy said it was too much to claim the policy alone is pressuring their profit margins.
Monetary policy is having a favourable effect for financial institutions, according to the French central banker, who is one of the contenders to succeed Mario Draghi as the European central bank’s next president.