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'Spain is not Cyprus': Euro bank boss

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'Spain is not Cyprus': Euro bank boss
The president of the European Central Bank wants to see the establishment of a supervisory body for Europe's banking system as soon as possible. Photo: Daniel Roland/AFP
11:58 CEST+02:00
The President of the European Central Bank Mario Draghi said on Thursday that the Cyprus bailout model would not act as a model for future financial rescues.

Speaking after a meeting of the governing council of Europe's central bank in Frankfurt, Draghi said Cyprus was "no template" for future interventions by the lender.

During a press conference, Draghi dismissed the speculation that had emerged about possible future Cyprus-style bailouts after March comments by the head of the Eurogroup, Jeroen Dijsselbloem.

The bank chief said: "I am absolutely sure that the chairman of the Eurogroup has been misunderstood."

"Spain is not Cyprus," Draghi also said during his press conference.

In his press conference, the bank boss was, however, less than full of praise for the initial proposal to sack Cypriot uninsured bank accounts holding less than €100,000. 

"That was not smart, to say the least, and was quickly corrected (by euro zone finance ministers)," he said.

"You have a pecking order, ideally insured depositors should be the very last category to be touched. The (European) Commission draft directive (on banking) foresees exactly this. 

"There isn't actually a specific distinction between categories of bondholders and uninsured depositors in the draft directive. But basically the point is that you, if you can, don't touch uninsured depositors," Draghi stated.

But Draghi did say the Cyprus bailout. had "reinforced the determination of governing council to support the Euro".

The central bank chief also stressed the need to set up a body charged with overseeing Europe's banking system so that crises like Cyprus could be avoided in future.

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