The President of the European Central Bank has said that the euro is an irreversible project, in response to French presidential candidate Marine Le Pen saying that she would take France out of the single currency if elected in April.
Speaking at the European Parliament on Monday, Mario Draghi employed his native Italian to make an emphatic statement on the matter:
“L’euro e’ irrevocabile, the euro is irrevocable. Questo e’ il trattato, this is the treaty.”
Draghi has not outlined the cost for a country to leave the 19-nation single currency, an exit process that is undefined and would have unknown consequences.
Le Pen has made a “return to monetary sovereignty” a key issue in her populist campaign. The National Front’s plan is to replace the euro with a basket of new national currencies and revoke central bank independence. Her chief economic adviser Bernard Monot said in a new interview that he has a plan if there is a catastrophe, but opined:
“I don’t think it will be a catastrophe because France is after all a major country and people will understand soon enough that we are working as patriots to restore France’s sovereignty.”
Draghi’s stance on the euro has been firm, but also tested in his own country as Italy’s Five Star Movement call for a referendum on the matter.
Draghi wrote to European Union lawmakers Marco Valli and Marco Zanni last month:
“If a country were to leave the Eurosystem, its national central bank’s claims on or liabilities to the ECB would need to be settled in full.”
Zanni noted that it meant Draghi had “clearly admitted that such an exit is possible” and called for more clarity on the cost of an exit.
“I’m sure,” he said, “that in the case of Italy’s exit from the euro, benefits exceed costs.”
Trump’s Wall Street move is “very worrisome”
Draghi also took aim at US President Donald Trump as he gave evidence to the European Parliament’s Committee on Economic and Monetary Affairs, rejecting Trump adviser Peter Navarro’s accusations that Germany has used a “grossly undervalued” euro to hurt the US.
“We are not currency manipulators,” Draghi said. “Our monetary policies reflect the diverse positions in the economic cycle of the eurozone and the United States.
He cited a US Treasury report to Congress in October that stressed that Germany does not manipulate its currency.
Draghi also called Trump’s deregulation of Wall Street to be “the last thing we need”.
He told MEPs:
“The idea of repeating the conditions of before the [global financial] crisis is very worrisome.”
Trump signed an executive order last week that relaxed the post-crisis Dodd-Frank legislation which curbed the risk-taking of US banks. Phil Angelides, former chair of the Financial Crisis Inquiry Commission, blasted Trump’s decision “insane”.
“If we were to look at historical experience and ask what are the man reasons for the financial crisis starting in 2007 onwards, well, one can disagree [over] whether it was too expansive monetary policy or the dismantling of financial regulation in previous years – but surely we can agree it was a combination.”