European Parliament Approves Lagarde As Next ECB Chief

Members of European Parliament take part in a voting session on the appointment of the new European Central Bank (ECB) President candidate and outgoing International Monetary Fund (IMF) chairwoman Christine Lagarde at the European Parliament in Strasbourg, eastern France, on September 17, 2019. FREDERICK FLORIN / AFP

 

The European Parliament on Tuesday approved outgoing IMF chief Christine Lagarde as the next boss of the European Central Bank, which last week announced massive stimulus for the sluggish eurozone despite divisions among its governors.

Lagarde, who was absent for the vote, won backing from 394 MEPs, with 206 voting against and 49 abstaining in a secret ballot. Some criticised her not turning up.

The parliament’s green light is just a recommendation. The final decision on her appointment is up to EU leaders in a mid-October summit. She is expected to easily clinch that confirmation as the leaders put her forward for the ECB post back in July.

Lagarde, a former French economy minister and head of the International Monetary Fund for the past eight years, is expected to largely follow the course set by departing ECB president Mario Draghi.

Draghi was hailed seven years ago for saving the eurozone from debilitating crisis by vowing “the ECB is ready to do whatever it takes”.

But his decision last Thursday to have the ECB intervene again with quantative easing (QE) from November and a cut to the interest paid on banks’ deposits deeper into negative territory has ruffled the feathers of some EU states.

Germany and the Netherlands notably accused Draghi of going too far. Sources told AFP that around 10 of the 25 ECB governors were against relaunching QE.

Draghi had underlined three challenges facing the ECB and its goal of price stability: a slowing eurozone economy, looming trade protectionism and Brexit, and the bank’s degrading economic forecasts.

He is to leave his job to Lagarde after hosting a last monetary policy meeting in October.

The euro, a symbol of Europe’s single market, is used by 19 of 28 member states currently in the European Union.

AFP

Greece Debt Crisis: EU Leaders Gather For Critical Summit

greeceEuropean leaders are gathering for an emergency summit in Brussels that could break the deadlock around the debt crisis facing Greece.

On Sunday, the Greek Prime Minister, Alexis Tsipras, set out new proposals to try and prevent a default on a €1.6bn (£1.1bn) International Monetary Fund (IMF) loan.

The proposals, according to an European official, held plenty of promise.

Greece risks crashing out of the single currency and possibly the European Union (EU) if it fails to repay the loan by the end of June

Talks have been in deadlock for five months. The European Commission, the IMF and the European Central Bank (ECB) are not willing to unlock the final €7.2bn tranche of bailout funds until Greece agrees to economic reforms.

The three creditors must agree to the deal offered by Greece, to ensure Monday’s talks have a clear focus.

Further findings revealed that if deposit withdrawals continue at the current pace, Greek banks will soon exhaust eligible assets they can pledge to the Bank of Greece for cash under the Emergency Liquidity Assistance (ELA) scheme.

Before then, the ECB could turn off the ELA drip feed because it is forbidden to allow the Bank of Greece to lend to insolvent banks.

ECB Launches New €5 Banknote

The European Central Bank issued the new five euro bill in Bratislava, Slovakia shortly after the ECB lowered interest rates by 0.25 percentage points.

The new bill is the first of the “Europa” series after the five euro banknote was officially unveiled by ECB President Mario Draghi in Frankfurt on January 10, 2013.

According to the ECB, ‘the new banknotes are to be introduced gradually over several years, in ascending order. The denominations remain unchanged: €5, €10, €20, €50, €100, €200 and €500.”

The Germany head of the anti-corruption organisation Transparency International and the president of the German tax payers association recently demanded in newspaper interviews to abolish the €500 bill which, according to them, facilitates money laundering, corruption and tax evasion.