Bloomberg News

ECB’s Draghi Says Swap Lines Might Imply Moral-Hazard Risk

January 16, 2012

Jan. 16 (Bloomberg) -- European Central Bank President Mario Draghi said monetary authorities’ swap lines have eased market tensions while posing a potential burden for stronger funding of banks.

“Although central banks’ swap lines have helped to comfort market participants and reduced tensions, their existence might also imply a moral-hazard risk, hindering EU banks from adopting a more robust funding structure,” Draghi told a European Parliament committee today in Strasbourg, France.

He spoke in his role as chairman of the European Systemic Risk Board, which is responsible for prudential oversight of the financial system in Europe. The Parliament in Strasbourg is a legislature of the 27-nation European Union.

To contact the reporter on this story: Jonathan Stearns in Strasbourg, France at jstearns2@bloomberg.net

To contact the editor responsible for this story: Jonathan Stearns at jstearns2@bloomberg.net


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