Introductory statement to the press conference (with Q&A)
Mario Draghi, President of the ECB,
Vítor Constâncio, Vice-President of the ECB,
Brdo pri Kranju, 4 October 2012
Ladies and gentlemen, the Vice-President and I are very pleased to welcome you to our press conference. I would like to thank Governor Kranjec for his kind hospitality and express our special gratitude to his staff for the excellent organisation of today’s meeting of the Governing Council. We will now report on the outcome of today’s meeting.
Based on our regular economic and monetary analyses, we decided to keep the key ECB interest rates unchanged. Owing to high energy prices and increases in indirect taxes in some euro area countries, inflation rates are expected to remain above 2% throughout 2012, but then to fall below that level again in the course of next year and to remain in line with price stability over the policy-relevant horizon. Consistent with this picture, the underlying pace of monetary expansion remains subdued. Inflation expectations for the euro area continue to be firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2% over the medium term. Economic growth in the euro area is expected to remain weak, with ongoing tensions in some euro area financial markets and high uncertainty still weighing on confidence and sentiment. Our decisions as regards Outright Monetary Transactions (OMTs) have helped to alleviate such tensions over the past few weeks, thereby reducing concerns about the materialisation of destructive scenarios. It is now essential that governments continue to implement the necessary steps to reduce both fiscal and structural imbalances and proceed with financial sector restructuring measures.
The Governing Council remains firmly committed to preserving the singleness of its monetary policy and to ensuring the proper transmission of the policy stance to the real economy throughout the euro area. OMTs will enable us to provide, under appropriate conditions, a fully effective backstop to avoid destructive scenarios with potentially severe challenges for price stability in the euro area. Let me repeat again what I have said in past months: we act strictly within our mandate to maintain price stability over the medium term; we act independently in determining monetary policy; and the euro is irreversible.
We are ready to undertake OMTs, once all the prerequisites are in place. As we said last month, the Governing Council will consider entering into OMTs to the extent that they are warranted from a monetary policy perspective as long as programme conditionality is fully respected. We would exit from OMTs once their objectives have been achieved or when there is a failure to comply with a programme. OMTs would not take place while a given programme is under review and would resume after the review period once programme compliance has been assured.
Let me now explain our assessment in greater detail, starting with the economic analysis. Euro area real GDP contracted by 0.2%, quarter on quarter, in the second quarter of 2012, following flat growth in the previous quarter. Economic indicators, in particular survey results, confirm the continuation of weak economic activity in the third quarter of 2012, in an environment characterised by high uncertainty. We expect the euro area economy to remain weak in the near term and to recover only very gradually thereafter. The growth momentum is supported by our standard and non-standard monetary policy measures, but is expected to remain dampened by the necessary process of balance sheet adjustment in the financial and non-financial sectors, the existence of high unemployment and an uneven global recovery.
The risks surrounding the economic outlook for the euro area continue to be on the downside. They relate, in particular, to ongoing tensions in several euro area financial markets and the potential spillover to the euro area real economy. These risks should be contained by effective action by all policy-makers in the euro area.
Euro area annual HICP inflation was 2.7% in September 2012, according to Eurostat’s flash estimate, compared with 2.6% in the previous month. This is higher than expected and mainly reflects past increases in indirect taxes and euro-denominated energy prices. On the basis of current futures prices for oil, inflation rates could remain at elevated levels, before declining to below 2% again in the course of next year. Over the policy-relevant horizon, in an environment of modest growth in the euro area and well-anchored long-term inflation expectations, underlying price pressures should remain moderate. Current levels of inflation should thus remain transitory and not give rise to second-round effects. We will continue to monitor closely further developments in costs, wages and prices.
Risks to the outlook for price developments continue to be broadly balanced over the medium term. Upside risks pertain to further increases in indirect taxes owing to the need for fiscal consolidation. The main downside risks relate to the impact of weaker than expected growth in the euro area, in the event of a renewed intensification of financial market tensions, and its effects on the domestic components of inflation. If not contained by effective action by all policy-makers in the euro area, such intensification has the potential to affect the balance of risks on the downside.
Turning to the monetary analysis, recent data confirm the subdued underlying pace of monetary expansion. In August the annual growth rate of M3 decreased to 2.9%, from 3.6% in July. While this decline was mainly due to a base effect, monthly inflows were also relatively contained. Conversely, strong monthly inflows into overnight deposits contributed to a further increase in the annual rate of growth of M1 to 5.1% in August, compared with 4.5% in July. This increase reflects a continuing high preference for liquidity in an environment of low interest rates and high uncertainty.
The annual growth rate of loans to the private sector (adjusted for loan sales and securitisation) declined in August to -0.2% (from 0.1% in July), reflecting a decrease in the annual rate of growth of loans to non-financial corporations to -0.5%, from -0.2% in July. By contrast, the annual growth of loans to households remained unchanged, at 1.0%, in August. To a large extent, subdued loan dynamics reflect the weak outlook for GDP, heightened risk aversion and the ongoing adjustment in the balance sheets of households and enterprises, all of which weigh on credit demand. At the same time, in a number of euro area countries, the segmentation of financial markets and capital constraints for banks restrict credit supply.
The soundness of banks’ balance sheets will be a key factor in facilitating both an appropriate provision of credit to the economy and the normalisation of all funding channels, thereby contributing to an adequate transmission of monetary policy to the financing conditions of the non-financial sectors in the different countries of the euro area. It is thus essential that the resilience of banks continues to be strengthened where needed.
To sum up, the economic analysis indicates that price developments should remain in line with price stability over the medium term. A cross-check with the signals from the monetary analysis confirms this picture.
Other economic policy areas need to make substantial contributions to ensure a further stabilisation of financial markets and an improvement in the outlook for growth. As regards fiscal policies, euro area countries are progressing with consolidation. It is crucial that efforts are maintained to restore sound fiscal positions, in line with the commitments under the Stability and Growth Pact and the 2012 European Semester recommendations. A rapid implementation of the fiscal compact will also play a major role in strengthening confidence in the soundness of public finances. At the same time, structural reforms are as essential as fiscal consolidation efforts and measures to improve the functioning of the financial sector. In the countries most strongly affected by the crisis, noticeable progress is being made in the correction of unit labour cost and current account developments. Decisive product and labour market reforms will further improve the competitiveness of these countries and their capacity to adjust.
Finally, it is essential to push ahead with European institution-building. The ECB welcomes the Commission proposal of 12 September 2012 for a single supervisory mechanism (SSM) involving the ECB, to be established through a Council regulation on the basis of Article 127(6) of the Treaty. The Governing Council considers an SSM to be one of the fundamental pillars of a financial union and one of the main building blocks towards a genuine Economic and Monetary Union. We will formally issue a legal opinion in which we will, in particular, take into account the following principles: a clear and robust separation between supervisory decision-making and monetary policy; appropriate accountability channels; a decentralisation of tasks within the SSM; an effective supervisory framework ensuring coherent oversight of the euro area banking system; and full compatibility with the Single Market framework, including the role and prerogatives of the European Banking Authority. As the Commission proposal sets out an ambitious transition schedule towards the SSM, the ECB has started preparatory work so as to be able to implement the provisions of the Council regulation as soon as it enters into force.
We are now at your disposal for questions.* * *
Question: Two short questions, Mr Draghi. The first one: you mentioned downside risks to the economy again. Have there been any discussions today about a possible rate cut in the months to come?
And the second one on Spain: do you find Spanish bond yields appropriate at the moment or are they still hampering your monetary policy transmission?
Draghi: On the first question the answer is no and on the second question, I will not comment.
But let me say one thing I forgot; Marko will answer questions about Slovenia today, so you will have to ask him about Slovenia.
Question: Mr Draghi, was the decision to leave rates unchanged unanimous? That is the first question.
And the second is: what do you think about publishing the minutes much sooner than 30 years after the respective meetings?
Draghi: On the first question, I would say that there was no discussion. So it was a unanimous decision about interest rates.
On the second question, clearly there have been statements by several Governing Council members and by myself showing an open mind with regard to this point; but it is a complex process and we are actually thinking about how to proceed. There are pros and cons. What you have to keep in mind is that the ECB is already a very transparent institution; just think about this press conference every month. There are also hearings in Parliament, interviews, speeches… I think that there are some benefits, as far as communication is concerned, to having greater transparency. At the same time, we have to evaluate and assess what this means in our specific context, the European context, which is different from that of the United States and the United Kingdom.
Question: Mr Draghi, last month when you announced the OMTs, you said that matters were now effectively in the hands of governments. How concerned are you by the way that governments have responded? Some finance ministers have suggested that the ESM might not be covering legacy bank debts for instance, and Spain has still not applied for a bailout.
And my second question is on Greece: how would the ECB feel about rescheduling the repayments on the Greek bonds? Would that qualify as monetary financing?
Draghi: On the second question, the answer is yes, it would qualify as monetary financing. We have said several times that any voluntary restructuring of our holdings would be monetary financing.
On the first question, I could say that today we are ready with our OMTs. We have a fully effective backstop mechanism in place, once all the prerequisites are in place as well. Governments have made substantial progress on a variety of fronts, both in what I call “vulnerable countries” and in countries that are under a full IMF programme. You can actually see this progress across the board as far as fiscal consolidation, structural reforms and also repairing some of the flaws of the banking sector are concerned. So, at this point, it is really up to the governments to decide what they want to do. The mechanism is in place. Now to your question about the ESM: we will have to assess exactly what it means, and I do not want to prejudge the technical discussion that will take place. But we have to remember that this is not a matter for the ECB, it is a matter for the governments concerned; it is governments’ money, it is taxpayers’ money. So, they will have to discuss and take a stance on exactly what is meant by legacy assets.
Question: Back to the OMT, you mentioned that there are steps that need to happen before the ECB would activate it. It is in the governments’ hands. Does that weaken the effectiveness of the OMT because you make yourselves part of the political process, which can be time-consuming and complicated?
And my second question is on the continued rise in youth unemployment in Europe and anti-austerity protests. How concerned are you about unemployment, youth unemployment and is austerity making the problem worse? Thank you.
Draghi: The first question is about conditionality. We view conditionality as an essential part of the activation of the OMT. I have made this point since the very beginning. Conditionality will actually have several roles. First of all it will reduce the moral hazard by governments. The second role it will have is that it protects the independence of the ECB. Without conditionality you would certainly have what people call fiscal dominance. With conditionality the independence of the ECB is protected. There is also a third angle to this. You can look at conditionality as a way to create credit enhancement on the bonds of the country that is actually the object of conditionality. So, it is an incentive to pursue the right economic policies, which have benefits for all parties concerned. Now, there are going to be, and rightly so, some political processes, but look at this from another angle. You know that one of the conditions is the signing of a memorandum of understanding with the Eurogroup. Once you have that, you have unanimity. And you have the whole of Europe that is supporting this programme politically. By itself, this is an extremely forceful ingredient in the programme.
The second question was about youth unemployment. We completely share the concerns of the situation. And, as a matter of fact, in independent speeches several members of the Governing Council have raised the issue of high unemployment and especially focused on youth, on the young part of the population. It is an incredible waste of resources and it will have to be addressed and it can be addressed by properly reforming the labour market so as to decrease the dual nature the labour markets have taken, I would say in the last seven to ten years, in some European countries. The challenge, of course, is to address the dual nature of the labour market, while keeping it flexible overall.
Question: Would a rate cut even be conceivable at the moment given that the transmission mechanism is broken and would there be any point in conducting such a thing until the OMT has been used or there has been a sustainable and significant drop in the bond yields of the countries that have distressed bond markets? Or is that an over-emphasis of the way you see this broken transmission mechanism?
And my second question. We are in Slovenia, at the spot where George W. Bush had his first ever summit with Vladimir Putin, after which Bush said he looked into Putin’s eyes and could see his soul and knew this was a man he could do business with. I was wondering if there was any such moment today between you and Mr Weidmann?
Draghi: I would like to know from you who is Putin and who is George W. Bush?
Question: I leave that to you.
Draghi: On the first question, in a sense it is a purely hypothetical question. But it can be addressed by saying that non-standard monetary policy measures are being designed and implemented when the standard ones are not fully effective. Otherwise, we would simply stay with the standard policy measures. So, in a sense, this answers your question.
Question: Can you carry on using standard measures at the same time as having to deploy non-standard ones?
Draghi: Well, we have to see if we can repair the monetary policy transmission channels. We do not speculate on future changes in interest rates. I think that the Governing Council has assessed that the price level and the rate of change of prices is in line with medium-term price stability, according to our definition. So, that is the assessment we made about the interest rate and, as I said, there was no discussion.
But to answer your second question, while I do not want to comment on individual positions, of course, I can say that the discussion was very constructive across the board.
Question: Mr Draghi, you keep encouraging banks to repair their balance sheets. Do you think that they should be able to use ESM funds for that, for their existing problems as well?
And my second question regards Spain: do you think that precautionary credit lines for Spain should be sufficient to solve Spanish financial problems?
Draghi: On the first question: when I said there has been significant progress, I included the repair of bank balance sheets. The statement the President of the European Banking Authority (EBA) gave yesterday, when he presented the figures on the recapitalisation that has taken place so far, was reassuring in this respect. So, the capitalisation gap that was rather large until two years ago has been reduced significantly by the euro area/ European banks.
On Spain: it is one example where significant progress has been made. Significant challenges remain ahead as well, but the progress made on the front of fiscal consolidation, structural reforms (with the announcement of a very large reform programme), and on the front of the banking sector, with the conclusion of the stress test, is really remarkable if you think of just how many measure have been announced, legislated and implemented in such a short period of time.
Question: Mr Draghi, just to follow up on that question. Does that mean that it would be enough for Spain to continue on its reform progress for the ECB to start buying bonds or would Spain actually have to commit to much harsher reforms for you to intervene?
And my second question would be: about a year ago, you said in a similar press conference that you would make periodic checks on whether you are in sync with the tradition of the Bundesbank or whether you are deviating from it. I was wondering what your assessment is today, whether you are in sync, or how close are you?
Draghi: On the second point, I can answer right away that if the tradition of the Bundesbank was to ensure price stability, the ECB is fully in sync with that tradition.
On the first question, there is a tendency to identify conditionality with harsh conditions, as you said. Conditions do not necessarily need to be punitive. Actually, many of the conditions are related to structural reforms, which have social costs, but also great social benefits. And if the reforms are well designed, the latter are going to be greater than the former. So, whether this is enough is up to the Spanish Government to decide. It is for the other euro area governments to decide whether the programmes suffice – you know what the conditions are, you know that it is necessary to submit a request for an EFSF/ESM programme. We would actively seek the IMF’s involvement in the process. Having said that, we now have a mechanism in place that is a fully effective backstop if such a request comes and if the assessment of the Governing Council regarding the monetary policy transmission channels allows action to be taken.
Question: I was wondering whether you could explain your thinking with regard to Portugal, because Portugal does look as if it has fulfilled the prerequisites for the OMT to work. So, why hasn’t the European Central Bank bought Portuguese debt on the secondary market?
And then one other question, because we are in Slovenia: the Slovenian Government is going ahead with the setting up of an institution to take over the non-performing loans from the banks in return for providing them with government bonds. Will those government bonds be eligible as collateral if the banks present them?
Draghi: Portugal is an example of the significant progress that I have hinted at before, of the very, very significant progress that has been achieved. Moreover, the overall situation, politically speaking, is a strong situation. Obviously, we also fully share the concerns that have been expressed about the difficult social situation, but the reform agenda is firmly in place. The OMT would not apply to countries that are under a full adjustment programme until – and that is what I believe I said last time – until full market access, complete market access has been obtained. And this is because the OMT is not a replacement for a lack of primary market access. By the way, on this front, among several pieces of positive news that we have had in the last few days, we had one piece on Portugal, namely that, yesterday, for the first time, a three-year bond was issued, which is not complete market access, but it marks the beginning of complete market access, so that it is actually a reassuring bit of news.
Kranjec: On Slovenia, you are right. The Parliament has adopted a law on the agency that will try to carve out bad assets from the banks. But the precise modalities for the eligibility of these bonds has not been decided yet, so that I am not able to tell you whether this would be acceptable or not. I can only tell you that the pool of collateral that is available to Slovenian banks at the moment is sufficient and that it is not an urgent matter. I understand that it will be elaborated in further steps on this law.
Question: Have you seen any signs that the pure announcement of the OMT framework has affected the easing of credit conditions in the weak countries?
And my second question is, have you discussed what could be a good measure to decide what is an acceptable level of financial fragmentation and what is an unacceptable level?
Draghi: On the first question, the answer is yes.
Question: Sorry, because the figures of today, the August figures, show that especially in Spain it is getting worse.
Draghi: There was a substantial, significant improvement all across financial markets and then there was a correction. If we take a snapshot now with respect to the beginning of August we see that the various interest rate spreads are still at a level way below where they were in July. We see one comforting piece of news, as I said before, about Portugal, having issued the first three-year bond. The second piece of good news actually concerns Spain, that Spain has completed almost 90% of its funding programme for the sovereign. There has been sizeable issuance by corporations and banks since then and, something that is dear to our eyes and we always look at: TARGET2 balances (or imbalances) have stabilised. All in all, the effect has been positive. There have been sizeable inflows of bank deposits in Italy. Spain’s recourse to central bank financing has gone down in the last month. Not bad, but at the same time we also have to express a note of caution. First of all, volatility is still relatively high and, secondly, governments will have to persevere in their reform action on all fronts: fiscal consolidation, structural reforms, the banking sector and more generally the financial market sector.
What is an acceptable level of fragmentation? Well, it is hard to say. But certainly when you see two subsidiaries of the same company located in two different countries and paying completely different interest rates for their borrowing, when you see exactly the same individual borrower, say a young couple that wants to buy a flat, and paying a completely different interest rate on mortgages, then you start asking yourself, maybe there is a problem here. Then you look around and you see that credit flows are normal in one part of the euro area, are non-existent in another part, falling and have been falling precipitously in yet another part. When you see that you have widespread credit rationing in some parts of the euro area, when you see that there is a very strange correlation between the movements in the exchange rates and the interest rates; namely that the exchange rate appreciates when the interest rates go down, and vice versa. When you see that the bid-ask spreads reveal a profound lack of liquidity in certain markets, when you see that levels of volatility are abnormally high and when you see that you have the inversion of the yield curves all of a sudden, which then disappears right after an announcement, then you say that you have a reasonable and possibly unacceptable level of fragmentation in the euro area. But the issue is really that the level of fragmentation becomes unacceptable when the singleness of the monetary policy in the euro area is being put into question. Because that is the time when we cannot achieve our primary objective, namely maintaining price stability in the medium term across the euro area.
Question: I would like to return to the question of bad banks. The ECB had some concerns regarding the establishment of this agency or bank and I would like to ask you, Mr. Draghi, whether this remark still stands or you support this, let’s say, resolution for Slovenia?
And the second question is, what are your recommendations for Slovenia regarding fiscal consolidation? Do you think that Slovenia needs a bailout?
Draghi: I think Marko will respond best to both questions, but by and large let me say that we agree with the overall assessment of the IMF.
Kranjec: Just to say a few sentences. The ECB made an assessment of the law that was adopted and we understood it in a sense that the view was that the agency, the government and the central bank should cooperate closely in deciding how to make the banking sector more resilient.
As to the second question regarding the bailout, I think it is much too early to say anything about it. All macroeconomic indicators at the moment point to the fact that if a country adopts decisive stabilisation measures in fiscal consolidation, in labour markets, in pension reforms and of course in the banking sector, it will not need to apply for a programme, but in the end, as the President also said, in many countries that is primarily a political decision. The central bank cannot operate in an environment which is inherently unstable from a macroeconomic point of view.
Question: As a member of the Slovenian press, my question is rather similar. The decision on the OMT programme has contributed enormously to calming the situation in the markets. However, the yields on Slovenian government bonds remain rather high and surpass the yields of the Spanish government bonds. What do you believe are the factors that could calm this situation, which is very worrisome for Slovenian citizens?
Kranjec: The spreads that you have noticed in the markets in our opinion do not reflect the fundamentals. You should take into consideration that the capital markets for Slovenian paper are very shallow, the transactions are rare and one cannot judge the underlying fundamentals from two or three transactions. We believe that with the adoption of the stabilisation measures that I mentioned before, spreads will go down and I understand – no I do not only understand, you can verify yourself – that spreads have gone down. With the adoption of further measures I believe that spreads will go down as they have done in other euro area countries.
Question: Two questions. The first one: How concerned are you that if the OMT programme actually comes into action it might rearrange the yield curve and denaturalise the yield curve, as it were and frontload the short-end of the maturity spectrum?
The second one is on the OMT per se: If the OMT is a purely monetary measure for repairing the dysfunction of a fragmented market, how can you set political preconditions? Is it not a little bit like the local fire brigade telling me “ I can only turn on the water if you show me that you have a roof improvement programme”?
Draghi: On the first point, we will certainly monitor the strategic response of the issuers to our programme. The OMT is not meant to induce a strategic response in favour of issuing short terms.. So this will be monitored. By the way, I think, and that is my purely personal perception, that all of the countries that may need an OMT have now reached, after many years of a difficult, very difficult process, reasonable maturities, reasonable durations in their stock of public debt. It is very unlikely they will change these durations in favour of a short-term issuance. First, because they have market access. It is not that they do not have market access. These countries do have market access. So there is no reason really to change the duration, and you know there are not only pros if you change the duration, you also have some serious cons. So all in all, I think it is unlikely. In any event the ECB will closely monitor this possible strategic response by issuers.
As to the second point, I think it is just the other way around. I think I did say something about this last time we had this press conference. When the OMT was designed, we had the perception and the evidence that there were tail risks in the euro area, namely that there was a bad equilibrium for certain countries in certain markets. It means that expectations were self-perpetuating and in the end would create disruptive scenarios. So then it is opportune for the policy-maker, which in this case is the ECB, to step in with a programme. At the same time, we should not forget how these countries got into a bad equilibrium to begin with, namely with bad policies, or in some cases no policies at all for a long period of time, while the rest of the world was changing completely. So the first conclusion was that any monetary policy would have no effect if the other policies did not change. That is why conditionality is so important. Eventually, as I said at the beginning, it is what makes the monetary policy effective and it is what protects the independence of the ECB. So I would not buy the example you have given, I think it is really an integral part of this.
Question: Are you comfortable with the current situation in which Spain – and even Germany – has doubts about the rescue? Or did you expect a more rapid reaction from the political side?
And second, do you think that Spain has the possibility to resolve its crisis without European aid?
Draghi: Unfortunately, I cannot comment on either of the questions, because stopping this process is very much a decision that is entirely in the hands of governments. As I have said over and over again, I think that through the OMT programme, the ECB has done everything possible and it could certainly create an environment which is conducive to reforms because it could remove what we call the redenomination risk. So, it could remove tail risks but ultimately, the initiative is in the hands of governments.
Question: You spoke several times about risks and now redenomination risks. Yields have calmed down since your announcement in July and then your further announcement. How much of these risks have been removed and do you think it is just a temporary effect which will be reversed in the event that the OMT programme is not applied?
And second, as you made OMTs dependent on a request and the governments seem to be extremely reluctant to make such a request, and given that the monetary policy transmission mechanism is still broken, have you thought about any other solution that you could apply in this event?
Draghi: Well, on the second question: for the time being, no. I think we have the sense that it was a very important decision which has many dimensions. We had to cope with all of these and it is now in place. We are ready and we have a fully effective backstop mechanism in place. Now it is really in the hands of governments and, as I said many times, the ECB cannot replace the action of governments.
With regard to whether the level of interest rates reflects redenomination risks, as I said before, we are considering a variety of indicators here, one of which is the interest rates and then we are also considering those I mentioned, namely the bid-ask spreads, liquidity, the shape of the yield curves and volatility. So there are a variety of indicators which will certainly inform our monetary policy assessment.
Question: With regard to the recapitalisation of banks through the ESM, do you see any possible way out and if so, what is it?
And second, the markets are already discussing the point at which you could intervene in the markets in the event that Spain or another country asks for aid. Do you have a particular target or target range?
Draghi: On the second question, the answer is no. As I just said, we are looking at a variety of indicators. And we will look at all of them because we have to carry out monetary policy assessment. What is the degree of disruption to our monetary policy transmission channels? That is simply a question we have to answer.
On the first question, as I said before, it really is very much in the hands of governments. They took the initiative a year and a half ago to create the ESM. Now that it is about to enter into force, there are certain limitations that are being brought to the table. There is going to be a political discussion and frankly, it would not be right for the ECB to prejudge the outcome of this discussion, nor to express views on it.
Question: I would like to ask you a question on the supervision of banks: how do you plan to ensure that the two tasks to be performed by the ECB will be separated? In Germany at least, there are still important people who have many concerns about this potential conflict of interest. Jens Weidmann recently raised these concerns in an interview, so what would be your response?
Draghi: I think there are very important concerns that we are addressing by means of a proper internal organisation. The proposal doesn’t give us much of an option on this. I think one of the principles I stated at the very beginning of this discussion was that, if in the end the ECB is involved in the single supervisory mechanism, we have to make sure we have an organisation which de facto assures the separation of monetary policy from supervision. And this can be done by fully delegating the task to the Supervisory Board. Fortunately, the Commission’s proposal does foresee the possibility of the Governing Council delegating all the supervisory tasks to the Supervisory Board. So, the management and internal organisational means are there. I believe it can be achieved.