Introductory statement to the press conference (with Q&A)

Mario Draghi, President of the ECB,
Vítor Constâncio, Vice-President of the ECB,
Frankfurt am Main, 3 September 2015

Jump to the transcript of the questions and answers

Ladies and gentlemen, the Vice-President and I are very pleased to welcome you to our press conference. We will now report on the outcome of today’s meeting of the Governing Council. As usual, let me start with the decisions taken.

Based on our regular economic and monetary analysis, and in line with our forward guidance, the Governing Council decided to keep the key ECB interest rates unchanged.

Our asset purchase programme continues to proceed smoothly. Regarding non-standard monetary policy measures, following the announced review of the public sector purchase programme’s issue share limit after the first six months of purchases, the Governing Council decided to increase the issue share limit from the initial limit of 25% to 33%, subject to a case-by-case verification that this would not create a situation whereby the Eurosystem would have blocking minority power, in which case the issue share limit would remain at 25%.

Underlying our monetary policy assessment was a review of recent data, new staff macroeconomic projections and an interim evaluation of recent market fluctuations. The information available indicates a continued though somewhat weaker economic recovery and a slower increase in inflation rates compared with earlier expectations. More recently, renewed downside risks have emerged to the outlook for growth and inflation. However, owing to sharp fluctuations in financial and commodity markets, the Governing Council judged it premature to conclude on whether these developments could have a lasting impact on the outlook for prices and on the achievement of a sustainable path of inflation towards our medium-term aim, or whether they should be considered to be mainly transitory.

Accordingly, the Governing Council will closely monitor all relevant incoming information. It emphasises its willingness and ability to act, if warranted, by using all the instruments available within its mandate and, in particular, recalls that the asset purchase programme provides sufficient flexibility in terms of adjusting the size, composition and duration of the programme.

In the meantime, we will fully implement our monthly asset purchases of €60 billion. These purchases have a favourable impact on the cost and availability of credit for firms and households. They are intended to run until the end of September 2016, or beyond, if necessary, and, in any case, until we see a sustained adjustment in the path of inflation that is consistent with our aim of achieving inflation rates below, but close to, 2% over the medium term.

Let me now explain our assessment of the available information in greater detail, starting with the economic analysis. Real GDP in the euro area rose by 0.3% in the second quarter of 2015, which was somewhat lower than previously expected. The latest survey indicators point to a broadly similar pace of real GDP growth in the second half of this year. Overall, we expect the economic recovery to continue, albeit at a somewhat weaker pace than earlier expected, reflecting in particular the slowdown in emerging market economies, which is weighing on global growth and foreign demand for euro area exports. Domestic demand should be further supported by our monetary policy measures and their favourable impact on financial conditions, as well as by the progress made with fiscal consolidation and structural reforms. Moreover, the decline in oil prices should provide support for households’ real disposable income and corporate profitability and, therefore, private consumption and investment. However, economic growth in the euro area is likely to continue to be dampened by the necessary balance sheet adjustments in a number of sectors and the sluggish pace of implementation of structural reforms.

This assessment is also broadly reflected in the September 2015 ECB staff macroeconomic projections for the euro area, which foresee annual real GDP increasing by 1.4% in 2015, 1.7% in 2016 and 1.8% in 2017. Compared with the June 2015 Eurosystem staff macroeconomic projections, the outlook for real GDP growth has been revised down, primarily due to lower external demand owing to weaker growth in emerging markets.

The risks to the euro area growth outlook remain on the downside, reflecting in particular the heightened uncertainties related to the external environment. Notably, current developments in emerging market economies have the potential to further affect global growth adversely via trade and confidence effects.

According to Eurostat’s flash estimate, euro area annual HICP inflation was 0.2% in August 2015, unchanged from June and July. Compared with the previous month, this reflects a further decline in energy price inflation, compensated for by higher price increases for food and industrial goods. On the basis of the information available and current oil futures prices, annual HICP inflation rates will remain very low in the near term. Annual HICP inflation is expected to rise towards the end of the year, also on account of base effects associated with the fall in oil prices in late 2014. Inflation rates are foreseen to pick up further during 2016 and 2017, supported by the expected economic recovery, the pass-through of past declines in the euro exchange rate and the assumption of somewhat higher oil prices in the years ahead as currently reflected in oil futures markets. However, this increase in annual inflation rates is currently expected to materialise somewhat more slowly than anticipated thus far.

This assessment is also broadly reflected in the September 2015 ECB staff macroeconomic projections for the euro area, which foresee annual HICP inflation at 0.1% in 2015, 1.1% in 2016 and 1.7% in 2017. In comparison with the June 2015 Eurosystem staff macroeconomic projections, the outlook for HICP inflation has been revised down, largely owing to lower oil prices. Taking into account the most recent developments in oil prices and recent exchange rates, there are downside risks to the September staff inflation projections.

In this context, the Governing Council will closely monitor the risks to the outlook for price developments over the medium term. We will focus in particular on the pass-through of our monetary policy measures, as well as on global economic, financial, commodity price and exchange rate developments.

Turning to the monetary analysis, recent data confirm robust growth in broad money (M3). The annual growth rate of M3 was 5.3% in July 2015, compared with 4.9% in June. Annual growth in M3 continues to be increasingly supported by its most liquid components, with the narrow monetary aggregate M1 growing at an annual rate of 12.1% in July, compared with 11.7% in June.

Loan dynamics continued to improve. The annual rate of change of loans to non-financial corporations (adjusted for loan sales and securitisation) increased to 0.9% in July, up from 0.2% in June, continuing its gradual recovery since the beginning of 2014. Despite these improvements, the dynamics of loans to non-financial corporations remain subdued. They continue to reflect the lagged relationship with the business cycle, credit risk, credit supply factors, and the ongoing adjustment of financial and non-financial sector balance sheets. The annual growth rate of loans to households (adjusted for loan sales and securitisation) increased to 1.9% in July 2015, after 1.7% in June. Overall, the monetary policy measures we have put in place since June 2014 provide clear support for improvements both in borrowing conditions for firms and households and in credit flows across the euro area.

To sum up, a cross-check of the outcome of the economic analysis with the signals coming from the monetary analysis indicates the need to firmly implement the Governing Council’s monetary policy decisions and to monitor closely all relevant incoming information as concerns their impact on the medium-term outlook for price stability.

Monetary policy is focused on maintaining price stability over the medium term and its accommodative stance contributes to supporting economic activity. However, in order to reap the full benefits from our monetary policy measures, other policy areas must contribute decisively. Given continued high structural unemployment and low potential output growth in the euro area, the ongoing cyclical recovery should be supported by effective structural policies. Further product and labour market reforms, and particularly actions to improve the business environment, including an adequate public infrastructure, are vital to increase productive investment, boost job creation and raise productivity. The swift and effective implementation of these reforms, in an environment of accommodative monetary policy, will not only lead to higher sustainable economic growth in the euro area but will also raise expectations of permanently higher incomes and accelerate the benefits of reforms, thereby making the euro area more resilient to global shocks. Fiscal policies should support the economic recovery while remaining in compliance with the Stability and Growth Pact. Full and consistent implementation of the Pact is crucial for confidence in our fiscal framework.

We are now at your disposal for questions.

* * *

Question: You have projected an inflation growth rate of 0.1% for this year. How do you assess the risks that the eurozone could experience deflation? Because you referred to the downside risks to your future projections. And what else can the ECB do, and at what point might it act in the future, to expand, perhaps, its quantitative easing programme? Some people say there's nothing more the ECB can do because all of these are due to factors beyond its control.

Draghi: We may see negative numbers of inflation in the coming months. Is that deflation? The Governing Council tends to think that these are transitory effects, mostly due to oil price effects. However, as I said before, we will closely monitor all incoming information, and the Governing Council wanted to emphasise in the discussion we had today its willingness to act, its readiness to act, and its capacity to act, its ability to act. There aren't special limits to the possibilities that the ECB has in gearing up monetary policy. And in a sense, the decision we've taken today, in changing one of the parameters to ensure the smooth and full implementation of the programme, is exactly a sign.

Question: I noticed that you slipped into your opening remarks on your willingness to carry out purchases until September 2016, that you're now willing to do it, or beyond if necessary. Should we take that as a sign that any souped-up, stronger QE package would involve a longer timeline? Or would you also consider buying more bonds in the shorter term or extending the range of assets you'd buy?

Second question: on your comments that it's premature to conclude whether what we've seen in recent weeks will pass through to inflation in the medium term, what sort of things will you be looking at in the coming months to judge whether there is a risk of it passing through to inflation?

Draghi: Let me just, perhaps repeat, perhaps say it differently: I started saying that the economic recovery is expected to continue, but at a somewhat slower pace, reflecting the slowdown in emerging market economies, primarily. I said it's still premature to conclude whether these developments could have a lasting impact on output and inflation. However, downside risks have increased and emerging market economies' challenges are unlikely to be quickly reversed. Let me add that the cut-off date of these projections was August 12, so the events that took place since then are a downside risk to the projections themselves. Furthermore, financing conditions, especially in the last two weeks and even before, have tightened. So lower commodity prices, a stronger euro, a somewhat lower growth, have increased the risk to a sustainable path of inflation towards 2%.

I also said, on the other hand, that monetary conditions remain supportive. So the discussion today basically converged on an assessment that the downside risks to output and inflation have increased; that we'll still monitor the risks to the outlook; and that the Governing Council emphasised, as I said a moment ago, the willingness and ability to act if warranted, by using all the instruments available within its mandate, and in particular regarding the asset purchase programme that provides by itself sufficient flexibility as far as the horizon, the size, and the parameters, as we've seen today.

Question: You mentioned the stronger euro and the effect that it could have on the downside risk to inflation. The euro is up a little bit in the last few weeks but it's down considerably if you look over the last year. Are you making a little bit too much out of this recent strengthening of the euro? Is there a risk that central banks around the world focus a little bit too much on the exchange rate?

My second question is there seems to be a lot of anxiety around the world about developed countries hitting 2% inflation. Given what's going on – short-term, long-term trends, demographics, competition, technological change – is it possible that major central banks are just aiming at the wrong target? Maybe 2% inflation is not the appropriate target in this current environment and you're printing all of this money to achieve a target that's not really attainable or not really appropriate any more.

Draghi: The first question relates to the exchange rate. I've said several times that the exchange rate is very important for growth, for price stability, and I've said it today as well. I've also said that it's not a policy target, but it's rather the effect of divergent recovery paths across the major jurisdictions; and it's the effect of divergent monetary policies across the major jurisdictions; and it's also the effect, of course, of what the market expectations are about future growth rates, future monetary policies, future interest rates. Having said that, all countries in the G20 have several times reaffirmed their commitment to the exchange rate policies, to these policies not being used in a competitive fashion, and you know the statement of the G20. So when we describe a situation where the exchange rate has produced certain effects, we want to give a description of what's happened.

On the inflation rate, your second question, this is an increasing ­– we shouldn't forget that 10, maybe 12, 13 years ago, a quite similar discussion was taking place, whether we should look at perhaps core inflation, perhaps headline inflation, and we decided to look at headline inflation as our objective. Which doesn't mean that we are excluding all other definitions of inflation. In fact in our analysis, both economic and monetary analysis, we use both concepts, but our mandate is defined in terms of headline inflation. You also said whether this, the 2% as an objective, is still reasonable or not. We haven't discussed that. We haven't discussed that, and in a sense it's kind of – it would test, I think, our credibility if we were to change target when it's taking more effort to achieve that target, so there hasn't been any discussion about changing target of inflation.

Question: Let me focus on Greece: is it accurate that in the Eurogroup the ECB insisted on excluding a depositor bail-in for Greece? And is this scenario still on the table? And what about the bail-in of senior bondholders? This is my first question.

The second question is, now that Greece has completed the first set of prior actions and got a disbursement approved from ESM, when will the ECB be in a position to reinstate the waiver for Greek collateral, and will this make Greek bonds eligible for a QE programme?

And one comment about today's decision for ELA, in which the ceiling was reduced.

Draghi: Yes, it's true, the ECB insisted to exclude any bail-in of depositors for the Greek banks. The ECB deemed any such measure to be counterproductive for the economic recovery and harmful for the Greek economy. It would have hit not only several thousand savers, but especially also SMEs and corporations and their deposits, and the ECB viewpoint was accepted by the Eurogroup. Similar considerations were deemed not to be applicable to senior bondholders. As far as the measure [depositor bail-in] is concerned, it's been excluded and will stay excluded.

The second point is about a waiver. Well, for reinstating a waiver, the country has to be in a programme for financial assistance, has to comply with it, and so has to show strong ownership and consistent and significant implementation. There will be some milestones that will be judged and assessed in the weeks ahead and based on that assessment, the Governing Council will take a decision. Now, once a waiver is in place, is this enough to start purchasing bonds? Well, we'll have to look at other conditions there. One is, as you know, the bond purchases cannot take place while a review is ongoing. So there are timing limits. Second, there are, as we've seen today moving from 25% to 33%, issue and issuers' limits that have to be respected. And finally, there has to be a debt sustainability analysis by the Governing Council.

On the ELA, you've seen that now we have open communication about ELA, and so the numbers were not discovered by your investigative capacities, but they were normally published. And so we've just one word about the terms about our ELA communication as far as the future is concerned: the Governing Council agreed in principle that in future a national central bank could, together with a request for non-objection regarding ELA, seek approval from the Governing Council to communicate related elements, including the outcome of ELA, if it sees a benefit in doing so from a financial stability perspective. Now, this would apply in particular if ELA addressed systemic issues, so that's what I was saying last time: if ELA is extended to a large part of a banking system. So the details of this principle will be discussed further in the Governing Council in due course, but basically the national central bank that asks for the non-objection by the Governing Council of the ELA will communicate the decision based on the communication that's basically agreed with the Governing Council. And this mostly, in particular, will apply for systemic issues.

Christine was saying that actually, even in this case, the ELA number was gathered by you thanks to your investigative capacities because it came out before we could announce it. That's okay. Next time we will announce it earlier.

Question: Mr Draghi, another question on the oil price and its impact on the economic recovery. It has gone down considerably this year, and there has been some rebound this week, but do you still think overall it is some boost for the euro area economy, the lower resource costs, or because they're reflecting lower global demand, they're like a burden now?

Draghi: Lower oil prices may be lower because of demand and/or because of supply effects. In this present situation it's lower because of supply effects and because demand from China and possibly other emerging market economies is lower. If it's because of supply effects, the outcome, the consequences of a lower price of oil are positive. I would say unambiguously positive, if there are no second-round effects, which can come from financial stability considerations, or second-round effects that simply these lower oil prices are being transmitted into a lower inflation rate for non-energy components. Now, when oil prices are lower because of demand effects, then we have to consider also the negative impact that lower growth in emerging market economies might have on the growth of the euro area.

Question: Mr Draghi, you mentioned earlier on that the Governing Council is willing to alter the size, the composition or the duration of asset purchase programme should it see the need. Could you perhaps give us a few more details on the instrument you would choose if you do see the need? Namely, would you take as a first priority the duration of the programme, or the size of it in the monthly purchases, or what is your thinking behind the way that that would operate?

My second question is about the change in the issue share limit. Again, could you perhaps give us a few more details on the reasoning behind that, in other words was it necessary for you to be able to achieve your objectives? And what account you took of financial stability concerns when making that decision.

Draghi: Your first question was not discussed. We aren't there yet. Your second question: as I think I said in the introductory statement, a review after six months was scheduled, and we found out that the ECB could actually buy more than the 25% limit in some cases where there would be no blocking minority by the ECB. That's why in those cases the limit was pushed from 25 to 33%. It was meant to ensure a smooth carrying on of the programme. I think that's the main reason. And in this sense, it shows the readiness of the Governing Council to basically use the flexibility of the programme so as to make sure the programme will carry out in a smooth way. A smooth and complete way. So also it is a sign that technical aspects will not stop the full implementation, and the full commitment of the ECB to the programme.

Question: Did you take account of financial stability when you took the decision?

Draghi: Not really, because we don't see at this point in time, concerns coming from that decision. But as I said we will look at it issue by issue and transaction by transaction and consider that.

Question: Mr Draghi, it seems that triggering an economic stimulus by measures of monetary policy becomes more and more difficult: why is this so? Is it only because of the situation in the emerging market countries?

Draghi: Well, I would say that our accommodative monetary policy is being passed through to the rest of the economy. I went through the various indicators of the monetary conditions: not only robust growth in M1, significant growth in M3, but also credit flows are now picking up. And the interesting thing is that credit is also improving considerably in some of the stressed countries, like Spain and Italy, but certainly in France as well. Its cost has gone down. More particularly what we have is a composed lending indicator cost: it went down by 74 basis points since the announcement of the credit easing measures. So we have a reduction in dispersion of credit flows, and also a reduction in spreads in lending costs and a reduction in spreads in lending costs to SMEs vis-à-vis other kinds of companies, large companies. So we have evidence that our monetary policy works. At the same time, we have the rest of the world, and we have these effects that we've observed over the last few weeks – perhaps more than a few weeks; especially in the last few weeks – so we'll have to see whether these effects are transitory or are permanent. Whether what happened is worsening our medium-term outlook or is just a transitory effect. And then we'll decide whether to do more or not.

Question: In a recent interview, still ECB board member Benoît Cœuré outlined that the ECB should look beyond short-term volatility on the markets and stay calm. So how calm are you, given the losses on equity markets this summer? Do the bulk of these losses seem past or should we still expect more severe shocks that force you maybe to take further actions?

And the second question, with an issue that not at first glance is a monetary policy topic: I mean by that the refugee crisis that is a shock for Europe and with more dramatic aspects every day. How important does that play, this topic, in your take on the situation from a central banker point of view? I know that this has a geopolitical background, this crisis, and I know that in the statement, geopolitical risks are not seen as to be monitored, as concerns the outlook of price developments for the medium term. So this is a non-issue for you?

Draghi: What happened in the last few weeks is basically twofold. The first is that we had a worsening of the situation in several emerging market economies, and it's unlikely that these challenges are going to be quickly reversed. And second, we had a tightening of financing conditions across the board, especially in the last two weeks. You should consider these projections assume certain stock prices, certain exchange rates, certain interest rates, which are not the stock prices, the exchange rates and the interest rates that prevail over a 10 days' average until today. So basically, much of what I've been saying is that we'll have to see whether this is actually short-term volatility or is permanent volatility, in which case you would observe an increase in risk premia. If you look at, for example, inflation expectations, inflation expectations have been pretty volatile. They went down and then they went up. And this may be due to many causes. One is, as I said, the loss of growth momentum in emerging market economies; the movements in the oil prices. There could also be another reason: that simply risk premium may have gone up. So we'll have to assess and look through all these several factors before we can decide whether the medium-term outlook has worsened.

On your other question, I think that the only answer there is that really any European should be horrified by the tragic loss of life happening on our doorstep. The ECB simply doesn't have any democratic mandate to act in this sphere, so it's a question for our elected leaders, but this certainly shouldn't hamper our most heartfelt participation to what is happening.

Question: You just mentioned the debate on core inflation and headline inflation. You referred to the fact that in the recent past there was a discussion about this as well. My question is whether, given the recent volatility of energy prices, core inflation has become a more important factor for the ECB given the volatility in energy prices.

Draghi: No, the answer is no. Our mandate is defined in terms of headline inflation. So we are designing our monetary policy on the basis of that measure. Are we ignoring everything else? No, the answer is no. For example, our mandate is defined in terms of price stability: are we ignoring growth? No. Are we ignoring labour markets? No. And in the same way we are not ignoring core inflation.

Question: Two questions as well. Back to the issue limit: so you say that the decision to increase it will help the smooth implementation of the programme. So just to clarify, did you already run into constraints now, or is this in anticipation of more aggressive purchases down the line? And also did you discuss adjusting the issuer element on this?

And the second question. In August last year, you told us that the ECB was looking to improve its inflation forecasting model, since the forecasts had always been more optimistic than inflation, than actually played out, and I was just wondering where that stands. Did you adjust the models? And if not, have you identified what are the causes behind this? Where are you getting it wrong?

Draghi: The answer to the second question is really the causes now mainly lie with the oil price changes. If we are to ask what is the main source of the revised projections, I would say the main source is the change in the oil price. To a lesser extent it's the slower closing of the output gap, but it's to a much lesser extent.

We didn't discuss the issuer limit, and our decision to change the issue limit is simply to ensure the smooth implementation of the current programme. At the same time it clearly is a sign of the readiness of the Governing Council to adapt the parameters of the programme to the situation, so as to ensure the full implementation of the programme, because we shouldn't ever forget that the inflation path that is projected to reach 1.7%, if I'm not mistaken, now after the revision, in 2017, and the growth projections, are both predicated, conditional upon the full implementation of that programme.

Question: Could you give us an assessment more specifically on the situation in China and the response of the Chinese authorities on developments there, and could you tell us if you received any information from the Chinese authorities that would help provide some clarity to remove the uncertainty on the Chinese situation or if you expect to receive that in the coming G20 in Ankara?

Draghi: As a matter of fact, we do expect to have that, to have much more visibility than we have today, in the coming days at the G20 in Ankara. That is going to be one of the major themes of the meetings. Having said that, we took note of the Chinese decision, Chinese government decision, as far as the exchange rate is concerned. China reaffirmed several times the commitment she undertook in the G20, as far as the exchange rate is concerned, the commitment that I've said before. And at the same time certainly the Chinese government will have to continue implementing reforms so as to ensure the convertibility of the currency.

Question: Back in June you told us that markets should get used to periods of higher volatility. Now that we are in such a period, you seem to be very alerted and concerned. Why is that? What has changed your mood? Why has your mood changed so much, and don't you see a risk that markets are not able to learn again to live with higher volatility and with different circumstances if, every time there is volatility, the ECB steps in?

And the second question is on the deposit rate. Is that also an option for you, or is it still valid that the interest rates have reached the effective lower bound?

Draghi: The second question was not discussed. Actually, the answer to your second question was not discussed today.

On the first question, you're absolutely right: that's what I said in June, and the reference was to short-term volatility periods. What we've seen in the last few weeks, and months, actually, was basically two factors. We've seen two factors, two issues. One was the weakening of the major emerging market economies; and second, we've seen an induced volatility due to this effect and to the sudden changes in the oil prices. Whether this is short-term or long-term is what I was saying before, we'll have to assess. And of recent, we've seen obviously some considerable tightening of financing conditions.

Question: Mr Draghi, the Federal Reserve is expected to begin raising interest rates possibly very soon. I wonder if you could just talk about what effect that might have on the eurozone and on your policy. For example, do you see a risk that higher interest rates could spill over to the eurozone and put pressure on bond yields or borrowing costs?

And secondly a very simple question: were there any members of the Governing Council today who were arguing for increasing asset purchases right away?

Draghi: Second question answer: no, there wasn't any discussion about changes in the size of the programme or pace.

On the other question, we never really comment on other jurisdictions' policies, but if this is necessary to achieve the inflation objectives and more generally, more broadly, the objectives of the Federal Reserve's monetary policy, this is a plus for the world. So from this viewpoint we can only wish that all jurisdictions achieve their objectives in monetary policy.

Just going back also to – well, it's partly related to that; going back to the previous question as well: you see, the difference in June is that in June there was no need to revise downward our projections at all. So there is a difference.

Question: You've said repeatedly that the eurozone countries need to integrate further to overcome the crisis, but this is proceeding very slowly. From your point of view, what is the reason for that? Huge ideological difference between North and South, or political laziness, or lack of motivation, or fear of the people in Europe? And what is your strategy to overcome such restrictions, to realise deep integration here in Europe?

Draghi: Yes, you are right, I several times have commented on the imperfect nature of our integration at the present time, and how this imperfection is a source of fragility for the monetary union. There are several reasons, of course: these are countries that are different nation states; they have been different for many, many years; and they have fought against each other, for centuries. But the point is that all these countries, in the aftermath of the Second World War, acknowledged that European integration was not only an economic project but primarily a political project aimed at achieving permanent peace in Europe. And I'm quite confident that this absolute certainty still is with all Europeans. And of course the integration process is a very complicated and complex process that involves several dimensions, so it can go faster at times; at other times it can go slower. But recently for example we had the Five Presidents' report, which was designing a path towards greater integration, and we've seen several episodes where you could see, you could be actually quite optimistic, that the process is moving forward. But it moves forward, like in many other situations, it moves forward by coping with challenges, and winning over them. And that's what we are seeing now.

Question: Mr Draghi, further to that question about further integration in the Five Presidents' report, Mr Cœuré last week spoke about the ESM as a possible mechanism for becoming a kind of European treasury. I wonder how you see the debate, how you would like to see the debate on the evolution towards further integration, fiscal integration, take place.

Draghi: Yes. This is something that I did say several times. If you look at the ECB – now, of course, I'm a biased observer here – but you would judge that the integration of monetary policies has been pretty successful. Why is that? Because we moved from a rules-based system that we had in the '80s and the '90s to an institution-based system where you have co-decision. Co-decision in our sense, not co-decision in the way it's been used in Brussels between Parliament and different institutions. So it's a sharing of responsibility and a sharing of sovereignty within the same institution. And what I've been arguing is that the same path ought to be adopted in other areas, one of which is the budgetary area, where we now coordinate our actions based on a set of rules, one of which is the Stability and Growth Pact. Another one is the six-pack, and so on. Now, we think, and I certainly think, that this system is not completely satisfactory, for a variety of reasons that you've seen in the last few years, and so it would be a good thing if we were to move to a common institution also in the budgetary area. And this is a point that's been made in the Five Presidents' report so it's not only my own view. It's kind of widely shared. It's shared by other people; I wouldn't say 'widely shared': it would be too ambitious, perhaps.

Question: Two questions for you. First of all, you mentioned that you're hoping to get more clarity from the Chinese authorities during the G20. In the meantime, what exactly are you watching in terms of the economic data? Which metrics are you watching? Because many people find that quite confusing.

My second question would be, given that the ECB is now the main banking supervisor for the eurozone, are there any concerns that there are more risks for some of the institutions that you supervise, that they might have run into trouble as a result of the market turbulence, as a result of the market volatility? And finally, happy birthday.

Draghi: Thank you. Thank you. Now, we are observing a weakening of the prospects for the Chinese economy. This has two effects, substantially. One is through the trade channel, weakening the economies of the rest of the world, because China by now is a large share of the world economy, and has a confidence effect, as we've seen, on stock markets and all the other financial markets, which is also operating on the negative side. At the same time, of course, we see a lower oil price, and the rest of the world, at least certainly the euro area, would draw some benefit. To know what are the origins of this change, and especially whether this is just the beginning of a permanent lower long-term output or simply a transitory phenomenon, that's what we are going to – what we hope, at least, to know more about in Ankara in the G20.

On the second question, you're right: one of the lingering questions was, how is it possible that with all this volatility in oil prices and exchange rates and interest rates, isn't there any financial stability problem? And I can say that at least as far as the institutions that are being supervised by the ECB, we have not observed such an effect. You know, it's true that volatility is higher so the risks are higher. It's probably true that risk premia are higher as well. At the same time, we have not observed in the banking sector a substantial, significant increase in leverage, and I am deliberately very cautious in saying this, limiting our observations to what we are actually observing, namely the regulated institutions subject to our supervision.

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