NEWS Release - Transcript of interview with Klaus Regling, ESM Managing Director - Bloomberg TV “Surveillance”, 19 April 2017 - Interviewers: Francine Lacqua, Tom Keene
Bloomberg: Well we’re now lucky to be joined by Klaus Regling, he’s the European Stability Mechanism Managing Director. Mr. Regling, thank you so much for speaking to us. How do you see Greece unfolding? When will we actually have, if not a final resolution, a near-final resolution on Greece?
Klaus Regling: Well good morning. Greece of course is an ongoing story. Greece has been receiving loans from its European partners and the IMF since 2010. The ESM, we have already disbursed around €174 billion to Greece. We are now on the third programme, which is up to €86 billion as you mentioned. We have already disbursed in this programme €31 billion and we are now in the middle, we have another fifteen months to go till August next year, so we are right in the middle, we are talking about one, the next disbursement from the ESM; and importantly the IMF is looking at the situation. We are hoping that there will be an IMF programme in parallel with the ongoing ESM programme.
Bloomberg: Mr. Regling, what is the biggest financial stability risk to the Eurozone right now? I’m thinking of Italian banks, we’re looking at Greek banks, we’re looking at Brexit. Is there something that you worry the most about?
Klaus Regling: No, there are risks, you’re right, Brexit is not really a risk for the euro area, obviously the UK is a member of the EU right now but not member of the euro area, so for the euro area that will have a minor impact. You mentioned Italian banks, Greek banks, but it’s important to realise there are some issues here with a handful of Italian banks but it’s not the Italian banking system as such that is in trouble, that’s very different from where we were five, six years ago—Europe has come a long way. There are isolated risks, there are also political risks—which markets of course are very nervous about—elections are always important events in a democracy but they happen. We know some elections have gone very well recently, like in the Netherlands, despite all the worries we had earlier. There were presidential elections in Austria a few months ago, where a strong, pro-European candidate won. I’m quite optimistic about the French elections next Sunday and then the second round two weeks later, but of course the markets have to price in these risks.
Bloomberg: Mr. Regling, will your fund—and this is probably the most controversial thing in Europe, Tom—but will your fund inevitably at some point issue eurobonds? And will that lead to the economic union a lot of people want to see? A lot of people don’t want to see it, but actually you could see a smaller economic club.
Klaus Regling: Well that’s several questions in one. On eurobonds, in a way what the ESM has been doing the last few years is to issue eurobonds because we issue on behalf of all euro area countries. But often “eurobonds” are meant in a different way, they are defined differently and that’s where the controversy starts. I don’t expect that in the near future we will have a situation where one institution will issue bonds on behalf of all the euro area countries, that’s not in the cards but it’s also not necessary for the good functioning of EMU.
Bloomberg: Dr. Regling, Joe Stiglitz, among others, focuses on the little “g” in economics—the rate of economic growth. Our Taylor Riggs just reported on terrific auto sales in Europe. Is the big surprise here, is the gift that’s going to keep on giving for you and the other elites of Europe going to be renewed economic growth that will save the day for ESM and, for that matter, save the day for the ECB?
Klaus Regling: I think Europe has been on a better track than often recognised. We are in 2017, the fifth year of positive growth, and actually the last three years, growth in the euro area has been above potential and, if I take out the differences in demographic trends between Europe and the U.S., the GDP per capita growth in Europe is again exactly at the same speed as GDP per capita growth in the U.S. I think that’s slowly sinking in, I’ve been looking at it for quite a while and I’m not surprised. We’re happy that the IMF revised up the growth rates also in Europe, that’s good, so we’re happy about that. There are other positive developments in Europe that are not rightly recognised, so GDP per capita growth, we have the best income distribution in Europe in the world so many more people actually benefit from real growth than in let’s say the United States or in China. And our labour market is a lot better than you might think because the employment rate is a lot higher than it was ten years ago, while participation rate has been dropping in the U.S. So there is a lot of good news and I think this year it’s all coming together.
©2017, European Stability Mechanism
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