Central bank president clashes with prime minister’s stance on ESM

Dutch central bank president Klaas Knot’s view of the European Stability Mechanism (ESM) clashes with that of prime minister Mark Rutte, the Financieele Dagblad reports.


Knot told the FD on Tuesday he thinks the support agreed directly to banks for recapitalisation should include bad debts.
At a meeting two weeks ago to ratify the ESM treaty, the Netherlands, Germany and Finland – the Triple A-rated eurozone countries – agreed the fund could lend directly to banks but insisted the money should not be used to pay off bad debts.
However, Knot says he wants the money used to wipe out existing bad debts so long as the bank in question has a chance of survival.
He points to the fact that banks which receive support will come under EU supervision. Negotiations for an EU financial supervisor are continuing and it is unlikely this will be agreed before 2014.
Greece
On the subject of the Greek debt, Knot says he does not want the European Central Bank (ECB) to write down bonds which have been bought over the past few years. As president of the Dutch central bank, Knot is a board member of the ECB. ‘Only if Greek goes bankrupt will the ECB have to bleed,’ he said.
He would not comment on a possible contribution from other public backers.


blog comments powered by Disqus