Public Hearing with Mario DRAGHI, Chairman of the European Systemic Risk Board:
Première transmission: 09/10/2012
Brussels, Belgium - European Parliament
Fin de production: 05/10/2012
- extracts from the Public Hearing
EP Committee on Economic and Monetary Affairs
Only the original language version is authentic and it prevails in the event of its differing from the translated versions.
||Exterior shot of the European Parliament, Brussels, Beligum (1 shot)
||Arrival of Mario DRAGHI, Chairman of the European Systemic Risk Board, at the ECON committee, atmosphere before the opening of the ECON committee meeting,( 4 shots)
||SOUNDBITE (English): Mario DRAGHI, Chairman of the European Systemic Risk Board: "The ESRB (European Systemic Risk Board) advised the ESM (European Stability Mechanism) to increase the systemic resilience of CCP's by better defining the type of eligible collateral and the conditions the commercial banks guarantees may be accepted by collateral by CCP's. (Central Counterparty (“CCP”) resolution) The ESRB also advised the risk related to cross collateralisation should be adequately put into account. On clearing among non financial cooperation's operating derivate markets the ESRB advised the ESM, to restrict the possibilities for such cooperation's, to set outside CCP's so as to reduce counterpart risks, regrettably from a macro prudential view point, there is a risk that the systemic vulnerability identified by the ESRB will remain at least partly unaddressed."
||SOUNDBITE (English): Mario DRAGHI, Chairman of the European Systemic Risk Board: "The ESRB is examining potential risks from market practices, it has become very common in so called shadow banking sector, for example collateral pledge by a client may be reused by a lender for own borrowing needs, this pattern which is called re-hypothecation, may be repeated several times with the same collateral. It can therefore create a contiguous impact in case any party face to deliver. In other cases when collateral for security lending transactions is represented by cash that cash may be re-invest by the lender, in case such investment takes place in a risky assets or for a longer maturity, there are risk of re-use of cash collateral in securities financing transaction."
||SOUNDBITE (English): Mario DRAGHI, Chairman of the European Systemic Risk Board: "The ECB and the whole concept, way in which we look at the ESM is very open to Non-Euro-members who want to opt in and we have to make sure that the conditions in which they will participate are such as basically same of the others. And we have to make sure that this is compatible with the legal basis of the whole concept of ESM."
||SOUNDBITE (English): Mario DRAGHI, Chairman of the European Systemic Risk Board: "The most important part of the whole concept is by avoiding more hazards. When we have in place a mechanism whereby we can afford to let fail important institutions that is the best remedy against moral hazard. To be able to let afford to let fail are two things as I said, not using tax payer money and make sure that the payment system, that is the most relevant part of the financial system is kept alive during the resolution time."
||SOUNDBITE (English): Mario DRAGHI, Chairman of the European Systemic Risk Board: "We have to calibrate this leverage ratio in a way that it is not counterproductive, that it doesn't hamper the inter-bank market as it is doing it at the present time, one of the reasons that the inter-bank market has a lack of functioning is exactly that is that the present liquidity regulation is actually making it very costly, a money loosing proposition, to lend money by banks and to borrow money from banks."
||4 cut away shots