Draghi slams handling of Cyprus bailout

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ECB president Mario Draghi on Thursday slammed the Cyprus negotiators for their initial proposal of making small savers pay for the country’s bailout, He called the idea ‘not smart, to say the least’.
Draghi was quick to add that the proposal of imposing a levy on small savers did not come from the ECB.

‘The ECB had presented a proposal were no bailing of the depositors was foreseen. And let me also tell you that all the other propositions by the IMF and from the Commission had also the same feature. Then, it started a prolong negotiation with the Cypriot authorities, present at the meeting, the outcome of which was what you saw, namely a levy also on ensured depositors. That was not smart and that was quickly corrected the day after in a Eurogroup teleconference, so that is past’, said ECB’s chief Mario Draghi

Mr Draghi also said that the Cyprus bailout was not a ‘template’ for what would happen in future bailouts, indirectly clashing with Eurogroup President Jeroen Dijsselbloem
Earlier in march, Dijsselbloem caused a stir when he told a news agency that taxing depositors as part of a bailout could become a pattern in the future.
Meanwhile, Draghi also announced that the ECB will hold eurozone interest rates at 0.75%.

‘Based on our regular economic and monetary analyses, we decided to keep the key ECB interest rates unchanged’, said ECB’s chief Mario Draghi.

‘Fiscal policy strategies need to be complemented by growth-enhancing structural reforms. Such reforms should be ambitious and broad-ranging, encompassing product markets, including network industries, labour markets and the modernisation of public administration’, Draghi added.

Cyprus agreed to 10bn-euros of financial assistance with international lenders earlier in March. Under the bailout deal,  depositors with more than 100,000 euros will lose some of their savings but accounts with less than 100,000 euros will not be affected.

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