mario draghi : interview with der spiegel interview with mr mario draghi, president of the european central bank, and der spiegel, published on 30 december 2013. * * * spiegel : mr draghi, do you know andrea nahles? draghi : i have heard the name before but i don ’ t know her personally. spiegel : ms nahles is the new german labour minister and boss of jorg asmussen, your former colleague in the executive board of the ecb. that he gives up this prestigious job has caused great surprise in germany. did you chase him out? draghi : jorg and i had an excellent personal and professional relationship. i consider it as a great loss for us that he is returning to the government. of course we did not agree on every occasion. spiegel : asmussen is the third german central banker to give up his job prematurely, after bundesbank boss axel weber and the former ecb executive board member jurgen stark. why aren ’ t the germans happy at the ecb? draghi : you can ’ t compare these cases. jorg has made it clear that it was only family reasons which prompted him to go back to berlin. i have no reason to doubt that. spiegel : in any case, weber and stark resigned because of your policy, which led to your famous remark in london a year and a half ago about doing “ everything necessary ” to save the euro. that means, in an emergency, buying up the government bonds of the crisis - ridden countries and taking on risks amounting to billions for which in the end german taxpayers above all would be liable. can you understand that many german citizens are at odds with this? draghi : weber and stark resigned before my arrival at the ecb. but the truth is that conditions in the euro area have improved considerably since then. consider the latest developments : crisis - ridden countries such as ireland and portugal are exiting the bailout programme, the risk premia for loans to crisis - hit countries in southern europe are declining, and investors from all over the world are once again investing in europe. in other words, most of the financial - economic data are turning in the right direction. spiegel : are you saying the euro crisis is over? draghi : no, but the fears felt by some sectors of the public in germany have not been confirmed. what haven ’ t we been accused of? when we offered european banks

macroeconomic stabilisation through the pursuit of price stability. we do not and should not play an active role in the functions of allocation and distribution4. at the same time, our operational framework has always included elements of what goodfriend qualifies as credit policy. the ecb manages liquidity and steers money market rates by lending to banks in temporary credit operations against a broad range of collateral. furthermore, we have always remunerated reserves. does the fact that our operations entail some credit risk on the balance sheet of the central bank imply a violation of our ordoliberal principles? does it imply that the ecb policy interferes with credit allocation? my answer is no. the risks we take onto our balance sheet in the context of our operations are controlled, and they are accepted only insofar as they are strictly necessary for the pursuit of price stability. this is entirely consistent with the concept of monetary dominance, which stipulates that fiscal considerations cannot stand in the way of the achievement of price stability. indeed, ecb credit is backed by adequate collateral, which implies that the amount of residual risk borne by the central bank is buffered. there are two layers of protection. the first is founded on the ecb ’ s recourse to the borrowing institutions and the full credit and guarantee represented by their balance sheets. the second – when the first is exhausted – is given by the appropriation of the collateral posted as backing of the loan. if a counterparty defaults, the underlying collateral assets allow for the recovery of the amount lent. the use of risk control measures such as valuation haircuts and variable margins further mitigate the exposure to credit risk. the same risk control principle applies in the context of the omt programme, through limitations on the maturity of eligible securities ( one to three years ) and through the strict conditionality for a country to be eligible for the programme. another aspect of our operations is that they are designed precisely with the goal of achieving neutrality in credit allocation. having said that, the objective of monetary policy being stabilisation does not imply that it cannot contribute to efficiency and equity, and indeed stable prices are a precondition of both ( see b. coeure, monetary policy in a fragmented world ”, speech at oesterreichische nationalbank, vienna, 10 june 2013. bis central bankers ’ speeches the ecb ’ s policy framework was designed with a view to allowing the participation of a broad range