A Quote by Mario Draghi
Europe's financial system is fragmented, although the gap in funding costs for banks within the euro area is no longer as wide as it was two years ago. But in lending the differences are still very large, and in some countries the credit flow is disrupted.
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Financial institutions have been merging into a smaller number of very large banks. Almost all banks are interrelated. So the financial ecology is swelling into gigantic, incestuous, bureaucratic banks-when one fails, they all fall. We have moved from a diversified ecology of small banks, with varied lending policies, to a more homogeneous framework of firms that all resemble one another. True, we now have fewer failures, but when they occur... I shiver at the thought.
There are two issues that people sometimes confuse, but they're very closely related. There is the strength and the stability of the American financial system. And it's very important that that system remain stable and remain strong and lending is very important to consumers. Secondly, the economy. And what has gone on in financial system is impacting the economy. And as the economy is turning down, it is very important that lending continue to be available and be available to consumers. So what we're doing with this facility is to support - is to support consumer lending.
The financial benefits of prefabrication have never been as large as its advocates predicted, for although some labor costs can be reduced by machine manufacturing, on-site assembly of any building still depends to some extent on the handwork of skilled craftsmen.
Interest rates do not have to be identical across the whole euro area, but it is unacceptable if major differences arise from broken capital markets or concern about a euro area break-up.
Two decisions have damaged the stability both of the euro and of Europe: the premature admission of Greece to the euro area and the breach and subsequent weakening of the stability and growth pact.
Banks and other providers of credit to households have been competing vigorously to expand or protect their market share. In the process, lending standards have been progressively eroded so that lenders are now engaging in practices that would have been regarded as out of the question five or ten years ago.
The banks, because of mismanagement, because of huge risk taking, are now in very vulnerable positions. We can expect that we're gonna have to do more to shore up the financial system. We also are gonna have to make sure that we set up financial regulations so that not only does this never happen again, but you start having some sort of - trust in how the credit markets work again.
Higher capital requirements increase bank costs, and at least some of those costs will be passed along to bank customers and shareholders. But in the longer term, stronger prudential requirements for large banking firms will produce more sustainable credit availability and economic growth.
With the right sources of funding and some smart, strategic thinking about how to force non-banks to follow the same rules as other lenders, the entire landscape of consumer lending would change.
Europe and the euro zone have no reason, rationally, to push Greece out of the euro. But this is a system in which many parties, many countries, many governments, many electorates participate and we could have events which, rationally, are not controllable.
Not possessing definite geographical boundaries, at least in the East - its distinction from Asia is problematic, considering that two large countries, Russia and Turkey, stretch between the two continents - , Europe, from the beginning, has defined itself from the perspective of the constitutive specificity of its philosophical principles: the freedom of the Greek cities as opposed to the Asian despotic regimes. Although these principles were often contradicted and reversed into their opposite, the idea of Europe is inseparable from them.
We have all been brought up with an ethical system of 2,000 years ago, an industrial-managerial system of 200-300 years ago, a statecraft system of 200 years ago, and so on. None of this is working very well for the requirements of a time as complex and variegated as our own. So we stand shuttering at the threshold, with no clear map.
First, climate change is the greatest long-term threat faced by humanity. It could cause more human and financial suffering than the two world wars and the great depression put together. All countries will be affected, but the poorest countries will be hit hardest. Secondly, the costs of inaction far outweigh the costs of action.
Before the CFPB, there was no single agency or entity within the federal government tasked with protecting Americans from predatory or negligent practices of banks, credit card companies, mortgage lenders, payday lenders, credit rating agencies and other financial service businesses.
I don't want euro bonds that serve to mutualize the entire debt of the countries in the euro zone. That can only work in the longer-term. I want euro bonds to be used to finance targeted investments in future-oriented growth projects. It isn't the same thing. Let's call them 'project bonds' instead of euro bonds.
We still have a great amount of work to do in social development, including resolving one of the biggest challenges we face in this area, namely, reducing the gap between high-income earners and people, citizens of our country, who are still living on very modest means indeed. But we cannot, of course, adopt the solution used 80 years ago and simply confiscate the riches of some to redistribute among others. We will use completely different means to resolve this problem, namely, we will ensure good economic growth.
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