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European Economic and Social Committee
EUROPEAN INDUSTRY AND MONETARY POLICY
The role of the
European Investment Bank (EIB)
PRESENTATION OF THE PROJECT
CCMI – Group III
July 14th 2015
Main goal of the Project
..
The main purpose of this project is to
collect,
elaborate
and
disseminate
information on the legal, technical and
economic
feasibility
of
different
mechanisms of cooperation between the
Eurosystem and the European Investment
Bank (and National Promotional banks and
agencies) as a potential way of improving
the efficiency of monetary expansion in the
Eurozone.
Monetary expansion
EIB know how could be useful in improving efficiency of ECB
policies, that impact economy through:
.. Key interest rates
.. Expansion of Eurosystem Balance Sheet
Monetary expansion is achieved in an indirect way, channeling
liquidity to the banking system.
Involving the EIB could ensure that key interest rates and
monetary expansion impact as directly as possible in real
economy.
Monetary expansion
Quantitative monetary expansion has evolved in an irregular but
clearly expansionary way during the financial crisis.
EUROSYSTEM CONSOLIDATED BALANCE SHEET 2008 – 2015 (million EUR)
Source: ECB/Saxo Group
Monetary Expansion is not only a
matter of QE programmes
EUROSYSTEM CONSOLIDATED BALANCE SHEET 1999 – 2008
(million EUR)
Source: ECB/Depth Dynamics
Monetary Expansion is not only a
matter of QE programmes
..
The main objective of the Eurosystem - Keeping inflation under
but close to the 2%- means that, in the long term, monetary
expansion will increase over the GDP increase rate.
CENTRAL BANKS BALANCE SHEET AS A % OF GDP (2000-08)
Source: ECB / FED / Hinde Capital
Overall risk level of monetary
expansion
..
So, the ECB-EIB collaboration should be articulated
through mechanisms that do not increase the overall
risk of the Eurosystem consolidated balance sheet.
..
As opposed to that, increasing the efficiency of
monetary expansion implies:
a) Achieving similar results with lower resources
and risk
b) Achieving better results with similar resources
or risk
Expanded Asset Purchase
Programme 2015-2016
• This programme, which began in March at a monthly rate of
EUR 60 000 million and will last “at least” until September
2016, will be implemented through the acquisition of
financial assets.
• So, “at least” it will reach 1,14 trillion EUR (As a reference:
more than 50 times the EC Investment Plan for Europe or
Juncker Plan).
Long Term Programs
LTROs
2011-2012
- 1 trillion €
- Loans to European banks
ASSET PURCHASE
PROGRAM
2015-2016
- 60.000 Million € / month
(“At least” 1,14 Trillion €:
11% / Eurozone GDP)
- Public and private securities
- Term: 3 years
.. “Shared Risk”: 20%
- Rate: 1%
.. “Non shared risk”: 80%
(national central banks).
Indirect nature of monetary
expansion
• The main problem with monetary expansion is its lack of
focus. Funds are provided to banks and it´s up to the
banks to decide if these funds are or not invested and, if
so, if they are invested in or out of the Eurozone and in
productive or speculative activities.
Indirect nature of monetary
expansion
..
There are differing opinions about the extent to
which the banking sector will redirect the resources
obtained through monetary expansion into local
economic activity. However, it is generally accepted
that this redirection is only partial.
..
It seems that a significant proportion of the
resources generated through monetary expansion
remain stuck on bank balance sheets, are invested
outside the territory or are channelled into
speculative bubbles.
A more focused monetary
expansion
This involvement of the EIB should further four basic objectives:
a) making the transmission mechanism of monetary policy more
efficient in terms of its direct connection with the real economy;
b) establishing a more direct relationship between monetary
policy, money supply and price stability;
c) establishing a more direct relationship between money supply
expansion and increasing productive capacity;
d) providing more resources for policies to promote investment in
the eurozone.
How to involve the EIB
expertise
We can visualise different potential operational options:
..
establishing some kind of systematic advice from EIB on the
allocation of resources generated through monetary
expansion.
..
loans from the Eurosystem to the EIB
..
acquisition by the Eurosystem of securities issued by the EIB
..
setting up a fund held by the Eurosystem/ECB, but
managed by the EIB
..
setting up a fund or entity managed –and owned- by the
EIB
The role of the EIB
• In theory, there may be different ways to make monetary
expansion more focused in real and productive economy.
• But, from our point of view, the collaboration with the
European Investment Bank is a practical, realistic and
feasible way of achieving this goal.
EIB. Credit Rating
EUROPEAN INVESTMENT BANK
Fitch
Moody’s
Standard & Poor’s
Long term
AAA
Aaa
AAA
Short term
F1+
P-1
A-1+
EUROPEAN INVESTMENT FUND
Fitch
Moody’s
Standard & Poor’s
Long term
AAA
Aaa
AAA
Short term
F1+
A-1+
If necessary, EIB also works
through banks
BREAKDOWN OF OBLIGORS 2013
Source: Fitch / EIB. Based on the ultimate obligor
EIB also knows how to work with
banks in a very secure way:
DEGREE OF PROTECTION IN CREDIT TO BANKS 2013
Source: Fitch
The role of the EIB
..
Aside from regulatory considerations, the
European Investment Bank would seem to be an
ideal repository of the know-how required to
redirect resources generated by monetary
expansion to the real economy.
..
Its objectives, as defined in Article 309 of the
Treaty on the Functioning of the European Union,
ensure the general interest of its activity.
Starting point
.. Main questions had to be answered:
A.
B.
C.
D.
..
CAN IT BE DONE?
HOW?
IN WHICH AMOUNT?
WHEN?
Our position / goals should be adapted as the Project goes
on, according to the positions of the European stakeholders,
EU institutions, technical issues, …
Main steps
..
..
..
..
..
Preliminary Draft (february 2015)
Decision of the EESC Board (march 2015)
Power point presentations on “Some Basic Concepts “ and
“Main Issues” (march 2015)
First contacts with EIB and ECB (march 2015)
Checking with experts in different EU countries (april 2015):
- 70 experts checked
- At the moment, 39 answers
Main steps
..
Four main power point presentations (to be continuously
updated) (may 2015):
- PRESENTATION OF THE PROJECT
- POLICY ISSUES
- LEGAL AND TECHNICAL ISSUES
- MAIN PROVISIONAL CONCLUSIONS
Main steps
.. Next steps:
-
Small presentations with stakeholders in
Brussels:
.. September 1st: IndustryAll
-
3 local events (Vilnius, Bilbao, …)
-
Brussels Round Table: November 12th
Main premises
A. One of the major barriers to increasing the efficiency
of monetary expansion policies is the indirect nature
of their transfer to the real economy, which is
achieved by injecting liquidity into the banking
system, either through loans to financial institutions or
acquisition of assets owned by those institutions.
But banks are not subjected to conditions that ensure
the correct destination of the funds. It is hoped that
financial institutions will move this liquidity into the
real economy, but this happens only partially.
Main premises
B. The EIB is the EU institution that has the
know-how and the tools that are specifically
designed to channel credit to the real
economy (infrastructure, SMEs, etc.)
Main premises
C. The main hypothesis of this Project is that
structural
collaboration
between
the
Eurosystem and the European Investment
Bank – or national promotional banks or
agencies- would be an excellent tool for
significantly improving the efficiency of
monetary expansion operations in the
Eurosystem, maximising efficiency at their
final destination, the real economy.
Main premises
D. As said before, this collaboration could be
achieved through:
.. Involvement of the EIB or / and of national
promotional banks or agencies from member states.
.. Involvement of the EIB could be in a substantial part
of the monetary expansion or in a limited amount.
Main premises. Some options
.. Transferring resources to the EIB balance:
a) Directly: ECB loans to the EIB
b) Indirectly: Purchase by the ECB of debt issued by the EIB
..
Without transferring resources to the EIB balance:
Setting up a Fund managed by the EIB but under the
Eurosystem / ECB ownership
Setting up a fund –or an entity- managed and owned
by the EIB
Making use of the EIB expertise through advice,
formal reports or delegation in allocation of
resources.
Main premises
F.
This involvement of the EIB should be
compatible with the objectives of monetary
expansion, namely:
.. to increase money supply;
.. to support price
economic recovery.
stability
and
Main premises
G. This involvement of the EIB should be a way to:
a) Achieving
similar results with lower
resources or risk
b) Achieving better
resources or risk
results
with
similar
Main Challenges for the
Project
.. TECHNICAL DIFFICULTIES
.. INSTITUTIONAL RELATIONS
.. DISSEMINATION
European Economic and Social Committee
EUROPEAN INDUSTRY AND MONETARY POLICY
The role of the European Investment Bank (EIB)
POLICY ISSUES
INDEX
..
MONETARY EXPANSION. SOME POLITICAL ISSUES
A.
B.
C.
D.
E.
..
..
..
..
..
OVERALL RISK OF THE EU INSTITUTIONS
MONETARY EXPANSION VS. RESTRICTIVE POLICIES
DIFFERENT VIEWS AND INTERESTS BETWEEN MEMBER STATES
MONETARY RISK VS. FISCAL RISK
PUBLIC RISK VS. PRIVATE RISK
MONETARY POLICY AND INVESTMENT POLICY
LIMITS OF MONETARY POLICY
PRICE STABILITY POLICY
POLICY QUALIFICATION
MONETARY POLICY AND GROWTH POLICY
Involving national promotional
banks or agencies
..
Involving national promotional banks or agencies
could include criteria for allocating resources
between
those
institutions,
as
well as
implementation and monitoring of the management
of the operations.
..
The EIB could be in charge of the definition and
monitoring of the implementation by promotional
banks or agencies of these criteria and
requirements
Monetary expansion
and investment policy
..
The main activity of monetary expansion (ECB) and EU investment
(EIB) may be similar: “INJECTING MONEY IN THE ECONOMY”
..
However, the main policies to which these activities respond look
different:
Monetary policy (ECB)
Investment policy (EIB)
..
But, as we´ll see:
both policies cannot be separated.
Monetary Policy is neither an objective of the main receptor
of Monetary Expansion (the Banking System)
An Opportunity for
Investment Policy
.. Involving EIB in monetary expansion would be quite an
opportunity for EU investment policy.
.. Just remember that the Asset Purchase Programme of
the Eurosystem (1,14 trillion €) is 50 times bigger than
the Juncker Plan (21.000 million €)
.. If needed by the dimension of the resources or for
other reasons, the EIB would collaborate with public
promotional banks or agencies of member states
Objectives of the Eurosystem
So, main criteria:
1. PRIMARY OBJECTIVE: PRICE STABILITY
2. General economic policies of the Union (art. 3)
3. Principle of an open market economy with free competition
4. Efficient allocation of resources
5. Principles Art. 119 (Coordination of Member States’ economic policies, internal
market, sound public finances, sustainable balance of payments).
Limits of Monetary Policy
The EU Treaty
So, for our purpose, these requisites must be fulfilled:
1. Price stability as objective (Art. 3 objectives only in a
secondary plane).
2. Take the form of one of the monetary policy instruments
(buying and selling financial instruments, credit operations)
Monetary Policy
FROM EUROSYSTEM TO MONEY SUPPLY
E
U
R
O
S
Y
S
T
E
M
MONETARY
EXPANSION
▲ MONETARY
BASE
BANKING
SECTOR
▲ MONEY
SUPPLY / M3
Money Supply and Credit are
directly related
Monetary Expansion is less and
less related to Money Supply
Monetary Expansion is also less and less
related to credit to private sector
There is no Price Stability Policy
without Credit to Real Economy
.. Monetary policy is not “a matter of the banking
sector”, of providing liquidity to it. The financial
sector is only an instrument.
.. The effects on money supply are only achieved
when –and if- the banks reinvest the funds in the
real economy.
There is no Price Stability Policy
without Credit to Real Economy
“Monetary policy transmission channels do not
function as mechanisms producing immediate
effect but as a framework through which the ECB
sends out a series of ‘impulses’ or signals with a
view to them reaching the real economy.”.
(OPINION of Advocate General EU Court of Justice Jan 14 2015)
Monetary Policy
FROM EUROSYSTEM TO REAL ECONOMY
E
U
R
O
S
Y
S
T
E
M
FINANCIAL SECTOR
OUT OF THE EUROZONE
INVESTMENTS
BANKING
SECTOR
REAL
ECONOMY
Monetary Policy
FROM EUROSYSTEM TO REAL ECONOMY
FINANCIAL SECTOR
E
U
R
O
S
Y
S
T
E
M
BANKING
SECTOR
EIB
OUT OF THE EUROZONE
INVESTMENTS
REAL ECONOMY
The link between Monetary Policy and Price Stability
E
U
R
O +/- Interest rates
/ Liquidity
S
Y
S
T
E
M
+/- LOANS
BANKING
SECTOR
+/- MONEY
SUPPLY
PRICE
STABILITY
The link between Monetary Policy and Price Stability
AND WHAT ABOUT EIB?
E
U
R
O +/- Interest rates
/ Liquidity
S
Y
S
T
E
M
+/- LOANS
EIB
+/- MONEY
SUPPLY
PRICE
STABILITY
EIB role and Price Stability
Policy
..
From a qualitative point of view, the link between
Monetary Policy and Price Stability works IN THE SAME
WAY through the Banking Sector or through the EIB.
..
As we´ll see, the impact on Price Stability through the
EIB would be, anyway, far more efficient.
EIB role and Price Stability
FINANCIAL SECTOR
E
U
R
O
S
Y
S
T
E
M
BANKING
SECTOR
EIB
OUT OF THE EUROZONE
INVESTMENTS
REAL ECONOMY
PRICE
STABILITY
EIB role and Price Stability
The main difference is:
..
Through the EIB, resources are ALWAYS channeled to
productive economy
..
Through the Banking Sector, sometimes it´s so and
sometimes not.
.
Policy Qualification
TWO MAIN REQUISITES OF MONETARY POLICY
A. INSTRUMENT: Credit / Asset acquisition
B. GOAL: Price Stability
Policy Qualification. POINT OF VIEW OF THE INSTRUMENTS
EU POLICY
E
U
R
O
S
Y
S
T
E
M
BANKING
SECTOR
MONETARY POLICY
FINANCIAL
SECTOR
MONETARY POLICY
OUT OF THE
EUROZONE
INVESTMENTS
MONETARY POLICY
EIB
MONETARY POLICY
Policy Qualification. POINT OF VIEW OF PRICE STABILITY
EU POLICY
E
U
R
O
S
Y
S
T
E
M
BANKING
SECTOR
FINANCIAL SECTOR
STABILITY POLICY
FINANCIAL
SECTOR
FINANCIAL SECTOR
STABILITY POLICY
OUT OF THE
EUROZONE
INVESTMENTS
MONETARY POLICY
EIB
MONETARY POLICY
Monetary Policy and Growth Policy
E
U
R
O
S
Y
S
T
E
M
NONPRODUCTIVE
ACTIVITIES
MONEY
SUPPLY
NO GROWTH
(
MONETARY
EXPANSION
INFLATIONARY
IMPACT
MONEY
DEMAND)
MONEY
SUPPLY
PRODUCTIVE
ACTIVITIES
GROWTH
(
MONEY
DEMAND)
NO
INFLATIONARY
IMPACT
Final remark
..
Improving the link between monetary expansion and
productive economy through the structural collaboration
between the Eurosystem and the European Investment Bank
seems coherent with the main objectives of both the ECB and
the EIB and with different EU policies:
-
Investment Policy
Growth Policy
Monetary Policy
Final remark
.. Furthermore, it seems that the structural
collaboration between the Eurosystem and the EIB
would be a significant instrument to improve the
efficiency of monetary policy, clarifying the link
between monetary policy and broad money supply,
real economy and price stability.
Efficiency of Monetary Policy
E
U
R
O
S
Y
S
T
E
M
BANKING
SECTOR
FINANCIAL SECTOR
Monetary
inefficiency
OUT OF THE EUROZONE
INVESTMENTS
Monetary
inefficiency
REAL BUT NONPRODUCTIVE ECONOMY
Monetary efficiency
but inflationary
impact
PRODUCTIVE
ECONOMY
EIB
PRODUCTIVE
ECONOMY
Monetary
efficiency
Non-inflationary
impact
European Economic and Social Committee
EUROPEAN INDUSTRY AND MONETARY POLICY
The role of the European Investment Bank
TECHNICAL AND LEGAL ISSUES
Starting point. Some options
.. Transferring resources to the EIB balance:
a) Directly: ECB loans to the EIB
b) Indirectly: Purchase by the ECB of debt issued by the EIB
..
Without transferring resources to the EIB balance:
Setting up a Fund managed by the EIB but under the
Eurosystem / ECB ownership
Setting up a fund –or an entity- managed and owned
by the EIB
Making use of the EIB expertise through
advice, formal reports or delegation in allocation of
resources.
Legal issues
.. Legal capacity of the EIB
..
“Independence of the ECB”: Autonomy of the ECB to define
monetary policy.
..
Geographical scope: Eurozone (ECB) / European Union (EIB)
..
Ability to delegate to the EIB the approval of operations
..
Formalization of the collaboration ECB-EIB
Ability to delegate in the EIB the approval of
operations. OPTION A
ECB
Fund without
legal
personality
(ECB Assets)
Funding
EIB
Ability to delegate in the EIB the approval of
operations. OPTION B
ECB
Loans at
key interest
rates
EIB
New entity
or
subsidiary
Ability to delegate in the EIB the approval of
operations. OPTION C
ECB
Loans at
key interest
rates
EIB
If EIB capital is not enough:
.. an specific reserve fund
could be created
.. in some cases, financed by
the differential in interest rates
SOME TECHNICAL ISSUES
..
Constrained credit demand
..
Technical capacity of the EIB
..
Key differences in investment policies
between ECB and EIB
..
Risk concentration
Constrained credit demand. To
which point?
CHANGES IN DEMAND
FOR LOANS OR CREDIT
LINES TO ENTERPRISES
(net percentages of banks
reporting positive demand)
SOURCE: ECB. BANK LENDING SURVEY APRIL 2015
Constrained credit demand. To
which point?
PURPOSES FOR WHICH EURO AREA BANKS USE THE ADDITIONAL
LIQUIDITY FROM THE EXPANDED APP (average percentage of
respondents per category) SOURCE: ECB. BANK LENDING SURVEY APRIL 2015
Constrained credit demand. To
which point?
PURPOSES FOR WHICH EURO AREA BANKS USE THE ADDITIONAL
LIQUIDITY FROM THE EXPANDED APP. GRANTING LOANS
(percentage of respondents) SOURCE: ECB. BANK LENDING SURVEY APRIL 2015
Key differences in investment
policies
If we compare ECB and EIB policies …
ECB
EIB
LIQUIDITY
High
Low
TERM
Short - Medium
Medium - Long
INTEREST
RATES
Far lower than
retail market
Close to retail market
CREDIT RISK
Usually lower
(Banks,
Securities)
Usually higher
(SMEs, Banks, Public
banks)
RISK
ABSORPTION
.. ECB
.. Monetary risk
.. Fiscal risk
.. EIB (or EIFund)
.. Fiscal risk
Key differences in investment
policies
But if we compare EIB and private banks policies …
PRIVATE BANKS
EIB
LIQUIDITY
Low
Low
TERM
Medium - Long
Medium - Long
INTEREST
RATES
Retail market
Close to retail market
CREDIT RISK
Usually higher
(Businesses, Households,
Securities, …)
Usually lower
(SMEs, Banks, Public
banks)
.. Own balance sheet
.. EIB (or EIFund)
.. Fiscal risk
RISK
ABSORPTION
CREDIT RISK
Credit risk in ECB expansionary policies is
usually lower than risk in EIB loans.
(Usually, through collateralized loans to banks)
The point is WHY?
CREDIT RISK
.. Two main reasons:
a) The image / reputation factor
It is understood that the reputation of the ECB solvency is key
for the reputation of the Euro itself.
b) The “risk-sharing” factor
.. Monetary risk falls on the entire Eurozone.
.. Fiscal risk may fall on the entire Eurozone or on member
states.
CREDIT RISK
.. The differential in credit risk can be compensated:
-
Through the differential in interest rates.
-
Through lower risks in ECB operations not
linked to the EIB
EIB-EIF. Credit Rating
Fitch
Moody’s
Standard
& Poor’s
Long term
AAA
Aaa
AAA
Short term
F1+
P-1
A-1+
If necessary, EIB also knows how to
work through banks
BREAKDOWN OF OBLIGORS 2013
Source: Fitch / EIB. Based on the ultimate obligor
EIB also knows how to work with
banks in a very secure way:
DEGREE OF PROTECTION IN CREDIT TO BANKS 2013
Source: Fitch
Liquidity risk
APP Programme.
Bonds average maturity: 8 years
Source: ECB / BBVA Research
ECB Long term operations,
more and more important
Source:
Nomura / ECB
ECB Long term operations,
more and more important
Source: ECB. Consolidated financial statement of the Eurosystem as at May 29th 2015
Liquidity risk
..
For the ECB, this higher liquidity can be reached just buying
bonds that EIB or other institutions transform into loans.
..
If necessary, the higher liquidity risk could be compensated
through lower liquidity risks in ECB operations not linked to the
EIB.
..
Anyway, from the point of view of containing inflation, less
liquidity in EIB operations can be clearly compensated by the
impact of these investments in growth.
Interest rates
THEORETICAL OPTIONS
A. Make use of key interest rates
B. Make use of rates close to retail market
C. Intermediate rates
Possible criterion: Starting from key rates, elevate
them as necessary to compensate for credit risk.
Interest rates
.. Another option: The Eurosystem / ECB
compensates credit risk of the operations
channeled through collaboration with EIB –directly
focused to real economy- with higher interest
rates in the rest of the operations.
Final remarks
So:
.. there are different ways to make compatible or
solve the differences in maturity, liquidity, risk and
usual interest rates of EIB and ECB
.. if appropriate, new maturity and risk criteria could
be established by the EIB-ECB Agreement for the
purposes of managing these resources, different
from the usual EIB and the usual ECB criteria.
Final remarks
.. Apart from the considerations before, it looks like, from a
macroeconomic point of view, credit focused in real
productive economy should be privileged by the
Eurosystem, both in accesibility and in interest rates. These
criteria should be taken into account when defining the
collaboration between EIB and ECB.
Final remarks
.. It looks like the main legal and technical issues concerning
the different options for the structural collaboration
between ECB and EIB can be easily solved.
..
The concretions and technical options should be analysed
and agreed between ECB and EIB.
..
These positions / criteria will be adapted as the Project
goes on, according to the institutional positions and the
evolution of the analysis.
European Economic and Social Committee
EUROPEAN INDUSTRY AND MONETARY POLICY
The role of the European Investment Bank
MAIN PROVISIONAL CONCLUSIONS
1. Monetary policy should be more focused
.. Efficiency of Eurozone monetary policy transmission –
its link to real economy- should be improved
.. Particularly, making sure that resources get to the real
economy and do not stay remained in the financial
system, out of the Eurozone or in financial speculation
.. Without increasing the overall risk of the Eurosystem,
the highest proportion of monetary expansion should
finance productive activities, related to sustainable
growth.
2. Involving the EIB, a good solution
.. The involvement of the European Investment Bank
(EIB) or other public promotional banks or
agencies from the EU or the member states seems
to be a good way to improve the efficiency of
monetary expansion, its relationship with real
economy and with productive activities.
3. Better results with fewer resources and risk (I)
.. The collaboration ECB-EIB should increase the
efficiency of monetary policy and so, should make
possible that better results and impact in real economy
are achieved with a lower risk.
3. Better results with fewer resources and risk (II)
For this purpose:
A.
ECB and EIB should make an intensive use of the different positions
that EIB can take in monetary policy transmission without increasing
risks usually taken with banks:
-
Through loans channeled by EIB to banks
-
Providing funds to EIB and national promotional banks or agencies
in similar ways as they are provided to commercial banks.
-
Buying EIB and NPBs bonds or accepting them as collateral in
similar ways as government bonds are bought or accepted.
3. Better results with fewer resources and risk (III)
B. ECB and EIB should accept operating through EIB even
in a more risky way than in other ECB operations. It
could be acceptable taking account of the higher
efficiency of these funds from the point of view of
monetary policy transmission.
This higher risk with funds provided to EIB would be
compensated with lower risks directly taken with
commercial banks. This way, the overall Eurosystem
risk would not increase or would decrease.
3. Better results with fewer resources and risk (IV)
C. The ECB-EIB collaboration could go further. Systematic
advice from the EIB could be of the greatest
importance for a better focusing of the monetary
expansion, even in operations directly related to
commercial banks. This advice could be mainly related
to the conditionalities to be established when banks
receive funds generated in monetary expansion, to
ensure that these funds are channeled to real and
productive economy.
3. Legal issues can be solved (I)
..
Even with a restrictive interpretation of the
independence principle of the Eurosystem, the structural
collaboration between the Eurosystem and the EIB can be
implemented –by free decision of the ECB- through
different ways.
..
The ECB-EIB collaboration should be subjected to the
monetary policy objectives and, just for this purpose, it
should establish a more efficient transmission mechanism
between Eurosystem and money supply, stability of
prices, real economy and growth.
3. Legal issues can be solved (II)
ECB and EIB should work together in exploring the specific characteristic of this
collaboration. Some options can be envisaged:
..
Transferring resources to the EIB balance:
a) Directly: ECB loans to the EIB
b) Indirectly: Purchase by the ECB of debt issued by the EIB
..
Without transferring resources to the EIB balance:
Setting up a Fund managed by the EIB but under the
Eurosystem / ECB ownership
Setting up a fund –or an entity- managed and owned by the EIB
Making use of the EIB expertise through advice, formal
reports or delegation in allocation of resources.
4. Technical issues can be solved (I)
..
Risk-sharing: Through the involvement of public
promotional banks or agencies in member states
..
Interest rates: The differential in rates is more an
opportunity than a problem
..
Liquidity: Through EIB bonds and/or more liquid
investments in the rest of monetary expansion
5.Why not a Collaboration Agreement between ECB and
EIB?
..
An adequate framework for a structural collaboration
..
It reflects that the collaboration obeys to the free decision of
both institutions and so, that their independence is fully
respected.
..
There are similar Collaboration Agreements between the EIB
and other European institutions
..
It may be an adequate framework for sharing views, strategic
and operational issues and establishing a climate of mutual
collaboration.
6. On the role of the European Parliament
.. The European Parliament, as representative of the
general interest of the European people, and
according to its interinstitutional role, should be the
adequate body to take the initiative in promoting this
kind of mutual collaboration between the ECB and
the EIB.
.. In this way, the European Parliament should make
sure that the EU institutions adequately develope
their main functions both in investment policy and
in monetary policy.
7. On the role of the European Central Bank (ECB) and
the European Investment Bank (EIB)
.. Of course, as parts of the collaboration we
propose, ECB and EIB should play an active role in
starting the necessary negotiations to prepare the
collaboration agreement.
7. On the role of the European Central Bank (ECB) and
the European Investment Bank (EIB)
..
In particular, the Board of Governors of the ECB and the Board
of Governors of the EIB should take a first declarative decision
in favor of such an approach. For that aim, a common working
team should be created between ECB and EIB so as to
clarifying the interest and the feasibility of the proposed
collaboration and, in other case, to propose alternative
measures to improve the efficiency of Eurozone monetary
policy and investment policy. In particular, to guarantee that
monetary expansion is adequately committed to real
economy, development and growth.
Thank you for your attention
European Economic and Social Committee
EUROPEAN INDUSTRY AND MONETARY POLICY
The role of the
European Investment Bank (EIB)
PRESENTATION OF THE PROJECT
CCMI – Group III
July 14th 2015