MARIO DRAGHI: Zero Hedge Readers Don't Understand The Euro Crisis
One of the reporters at the presser was Scott Solano of German news agency DPA.
Yesterday, Solano solicited questions from readers of the popular financial blog Zero Hedge.
The gist of the question Solano put to Draghi was this: Does the ECB have plans in place to protect financial markets in the event that a euro zone member state were to leave the common currency, especially taking into account various derivatives exposures and the like?
At first, Draghi seemed like he was going to avoid the question on the grounds that it was too hypothetical, but then he decided to answer it head on.
In short, Draghi said, there is "no plan B" for the euro.
Below is the full transcript of the exchange.
(You can watch the video here. The dialogue between Solano and Draghi starts at 57:45.)
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SCOTT SOLANO: Mr. Draghi, I've got a couple of questions from viewers at Zero Hedge, and one of them goes like this.
Say the situation in Greece or Spain deteriorates even further, and they want to – or are forced to – step out of the euro zone? Is there a plan in place so that the markets don't basically collapse? Is there some type of structure, or structural system, like a structural safety net, especially in the area of derivatives?
The second question is: you spoke earlier about the emergency liquidity assistance. What would have happened to the ELA in Cyprus – the approximately 10 billion euros – if the country had decided to leave the euro zone?
MARIO DRAGHI: Well, you're asking questions that are so hypothetical that I don't have an answer to them. But let me tell you, these questions – I may actually have an answer, a partial answer.
These questions are formulated by people who vastly underestimate what the euro means for the Europeans, for the euro area. They vastly underestimate the amount of political capital that has been invested in the euro.
And so, they keep asking questions like, "IF the euro breaks down..." and "IF a country leaves the euro tomorrow..."
I mean, it's not like a sliding door. It's a very important thing. It's a project in the European Union, this.
So, that's why you will have a very hard time in asking people like me, "What would happen if?"
No "Plan B."
Second thing: I think the ECB has shown its determination to fight any redenomination risk. And OMT, with its precise rules, and acting within its mandate, is there to this purpose.
So, that's the answer to the first question.
The second question was about ELA, but again, it's related to if Cyprus leaves, and we don't have that in mind, so, thanks.
No "Plan B."
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Zero Hedge's reply to Draghi on Twitter: