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‘Spain is not Cyprus’: Euro bank boss

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.

'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

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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ANGELA MERKEL

‘We’ll miss you’: Merkel gets fond farewell in Rome

German Chancellor Angela Merkel received a warm welcome during her visit to Italy on Thursday in one of her last foreign engagements before she steps down.

'We'll miss you': Merkel gets fond farewell in Rome
Chancellor Angela Merkel is greeted by Italian Prime Minister Mario Draghi at the Chigi Palace in Rome. Photo: picture alliance/dpa/LaPresse via ZUMA Press | Roberto Monaldo

Italian Prime Minister Mario Draghi paid tribute to Merkel as the pair, once hailed as Europe’s power couple, held what is likely to be their last bilateral meeting in Rome.

Merkel, who is bowing out after a historic 16 years in power, also made a private visit to Pope Francis during her visit, where they discussed climate change and the scandal of clerical sex abuse.

She and Draghi worked together closely when he was head of the European Central Bank (ECB) and at a press conference after their talks Thursday, he paid tribute to her “calm, determination and sincere faith in the European Union”.

“She transformed the role of Germany in Europe. We will miss her, but I am sure that we will see her again in Italy – perhaps in more relaxed settings – given her love for our country,” Draghi said.

Merkel responded that he had been “an essential and crucial guardian of the euro”, while also expressing her love for Rome, where she had earlier visited St Peter’s Basilica and was later due to give a speech at the Colosseum.

“Just a day in Rome tells me that you need to live more than a lifetime here to take everything in,” she said, adding: “I’ll definitely come back to Italy, albeit in a different way than before.”

Merkel will stay on as caretaker chancellor while her successors haggle over forming a coalition, a process she said “will definitely be faster than during the last government formation, I’m sure of it.”

READ ALSO: What will Angela Merkel do when she retires – and what will she earn?

Papal audience

Merkel earlier had a private audience with the pope, where they exchanged gifts and discussed the upcoming UN climate talks and the sexual abuse by clergy of children, a problem that has rocked the Catholic Church in Germany, as elsewhere.

“We had important discussions about child abuse,” Merkel, the daughter of a Lutheran clergyman, told reporters. “I wanted to underline with my visit that we think that the truth must come to light, and the topic must be dealt with.”

She visited the site of a new institute within the Jesuit-run Gregoriana university dedicated to child protection and met with Father Hans Zollner, the Vatican’s leading expert on measures to safeguard minors.

Angela Merkel meets Pope Francis on Thursday in the Vatican.
Chancellor Angela Merkel meets Pope Francis on Thursday in the Vatican. Photo: picture alliance/dpa/VATICAN MEDIA/AP | Vatican Media

EU funds

After the country took a eurosceptic turn under previous governments, Draghi is determined to put Italy back in the heart of the EU.

He praised Merkel for having a “decisive role” in establishing the EU’s post-pandemic recovery fund, of which Italy is the main beneficiary, saying it was a “tangible sign of European solidarity”.

The German chancellor, for her part, said she had “confidence that Italy will give the money out in a good way”.

There are questions of who will now lead Europe after Merkel’s departure.

“Italy will not take Germany’s place, rather Italy will represent Italy and Germany will be Germany. My successor will also be an important voice for Germany and represent Germany,” she said.

READ ALSO: When exactly will Merkel leave office?

Germany is inching towards a government led by Olaf Scholz after the Greens and the liberal FDPs said Wednesday they would try for a three-party coalition with his Social Democrats while shunning Merkel’s conservatives.

The two kingmaker parties’ decision sends the CDU-CSU bloc closer to the opposition, in a major shift for the country after a decade and a half of Merkel’s centre right-led government.

By Alice RITCHIE, Alvise ARMELLINI

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