Refinitiv Newscasts - Lagarde, Le Maire, Donohoe & Dombrovskis news conference 1

Omni Bridgeway

25/02/2022 15:47

Click the following link to watch video: https://share.newscasts.refinitiv.com/link?entryId=1_5fs9o9vf&referenceId=1_5fs9o9vf&pageId=RefinitivNewscasts
Source: Reuters

Description: Joint news conference between Bruno Le Maire, ECB President
Christine Lagarde, Eurogroup President Pascal Donohoe and EU Trade
Commissioner Valdis Dombrovskis. Outwatching comments on sanctions on Russia.
Short Link: https://refini.tv/3t73Hrp

Video Transcript:

>> The situation in Ukraine is extremely grave. I would like first and
foremost, express my deepest condolences to the families and close ones of the
victims. The EU condemns this unjustified and barbaric invasion in the
strongest possible terms. Russia is using brute force to remove Ukraine's
sovereignty. However, it is also about entire Europe's security architecture.
To be crystal clear, we are facing the greatest security threat since the
Second World War. Russia poses a very real threat to the free world, to our
security, stability, economies, and societies. The EU is acting immediately
against this outrageous violation of international law. As Bruno already
mentioned, the European Council, yesterday, EU leaders agreed to a massive
sanctions package against Russia. And this is already the second package of
sanctions which is being agreed against Russia. These sanctions are designed
to take a heavy toll on the Kremlin's interests and the political elite. They
will weaken Russia's economic base, deprive it of critical technologies and
markets, and reduce its ability to finance war. The sanctions are based around
five areas, starting with the financial sector. And actually sanctions are
already implemented against Russia and now decided they cover 70 percent of
Russian banking market, but also key state-owned enterprises, including in
defense. There are other areas of sanctions, including in energy and transport
sector, export controls, and the ban of export financing, ban of financing the
sovereign debt, visa policy, personal sanctions against persons involved in
this aggression. These measures are closely coordinated with our partners. Our
unity, the unit of Western democratical world, is our strengths, but we will
go further still. We are already preparing plans for next steps to take
against Russia with more sanctions. So that will also include Belarus. Again,
this will be done in coordination with our partners. Nothing should be off
limits, we are facing the ultimate test. This is a stark choice. Staying in
the world which applies on the respect of law or move towards the extreme
world where the only rule is might is right. The EU needs to do everything in
its power to stop Russia in its aggression. We have to rethink our relations
with Russia across the board. It is turning itself into pariah state. The EU
stands and will continue to stand by Ukraine and its people. We are united in
ourselves to support Ukraine in this difficult hour. Turning to the economic
implications. So first and foremost, there are severe economic implications
for Ukraine itself. Ukraine is suffering investor flight and its access to
financial markets has been very problematic. Its currency, hryvnia, has come
under pressure and central bank reserves are being depleted in market
interventions. So it's clear that Ukraine's financing needs will be massive
and we will need to match those financing needs. Well, as you know, we
recently decided 1.2 billion of macro-financial assistance emergency program,
we are moving now fast to disburse the first tranche of 600 million, but it's
clear that the support will help to go far beyond this. Just to give some
comparisons, before Russia's military buildup around Ukraine's borders, the
estimate of the financing gap for Ukraine for this year was around
two-and-a-half billion euros. After Russia's military buildup, it was around
five billion euros. And that was even before the military aggression started
because already the very fact of this, the military buildup was scaring away
investors. Well, now the financing needs are off the chart, we cannot really
estimate them, but we need to be ready to support Ukraine in every way we can.
>> The effective sanctions against Russia will affect EU economy too. But this
is price worth paying to defend democracy and peace. We'll help obviously to
consider how to mitigate its impact. Russia's invasion has already jolted
financial markets. The conflict adds a great deal of uncertainty to already
complicated economic situation and other challenges we are facing. This crisis
once again, demonstrates why Europe must remain united and resilient and why
we need to stick to our policies. It is thanks to our policies and to our
economic policy response during the crisis, that our economic fundamentals are
strong. But we only to stay vigilant and adjust policies if needed because
it's clear that EU economy is going through a period of profound challenges.
Investment needs are high for the green and digital transitions and in the
afternoons sessions we'll be discussing topics on EU's economic policy for a
strong and resilient growth, for a strong financial sector, for a progress to
be made on the banking union and our capital markets union because it's clear
that we also need to strengthen our economy to ensure that we have a strong
and sustained economic growth. Thank you. >> [inaudible 00:12:20]. >> Thank
you. It indeed darkest of hours and these darkest of moments that our thoughts
are with Ukraine and with the Ukrainian people as they face this unprovoked
attack. And they fear as we speak, for their lives. We will do all that we
can, all that is necessary to support them in these tragic circumstances. This
is not only an attack on Ukraine, it is an attack on the values of a free and
democratic world, values that are at the core of the European Union.
Therefore, the union stands strongly unites us in protecting our common
values, our freedoms, and the rule of law. Our leaders last night, took
decisive and collective action to hold Russia accountable. This is one further
step in our response. There is more to come but our first priority now is to
implement those sanctions, and finance ministers will be acting urgently to do
this. We know there will be consequences for standing up for our European
values and freedoms, we know there will be economic costs. But it is these
very values and freedoms that are fundamental to the success of our union, and
fundamental to our societies and to our economies. These costs will emerge,
they will emerge over the coming weeks and months. And we know that the impact
will be different for different member states. But our discussion here today,
led by Bruno, illustrated to me, it demonstrates us, that we will maintain the
unity of purpose that we have demonstrated over the past two years. While we
have started to consider the consequences of the last few days events, we do
so with an economy that is already strong, one that is already resilient,
thanks to the policy decisions that we have taken in recent years. Only in
December, the Eurogroup collectively agreed to maintain a moderately
supportive budgetary stance for our economies. And in doing so complementing
the monetary policy of our central bank, to give our governments the ability
to respond to the challenges of then, and now the challenges of today. But in
three weeks time, the Eurogroup will again review this issue. We will discuss
the coordination of our budgetary policies. And this discussion will come at
the right time, between now and then. It will allow us to revisit, to review
our strategies to ensure that we can support our economies and our assessments
at this moment of greatest challenge. But we will do this, that with an
economy, that due to its recovery will allow us to respond to this test. The
Eurogroup and the Euro area is united with our institutions as we respond to
this great test. Before I hand over to the President of the European Central
Bank, one further matter that is important from our Eurogroup discussion today
is that, our Greek Finance Minister colleague ministers [inaudible 00:16:40],
updated us on the early repayment of IMF and Greek Loan, Facility loans, a
very important achievement by him and his government. But a further statement
will issue and that later, Christine. >> Christine. >> [inaudible 00:17:55]. I
will switch back to English for those of you who put your headphones on. I
just want to tell you that the ECB is closely monitoring the evolving
situation. It will conduct a comprehensive assessment of the economic outlook,
which will include all the latest development. And which will form the basis
of our policy meeting, which will be a monetary policy governing council
meeting on the 10th and 11th of March. The ECB and all national central banks
in the Euro system will implement decisively and rigorously all the sanctions
decided by the EU and the European governments. To give you an example that
will apply to supervision, that will apply with cutting off liquidity access
for the targeted banks with a view to essentially freeze asset and starve
access to finance. Additionally, the ECB stands ready to take whatever action
is necessary within its responsibilities to ensure price stability and
financial stability in the Euro area. >> I would like to mention one
inscription that any visitor to the ECB will read because it is on the walls
of the visitors center. And it is a quote by Jean Monnet who said, "It is
better to fight around the negotiation table than on the battlefield." Never
more than today has this has been true. I would like to add on the economic
and financial impact that some of you might be interested in, that we discuss
the implications of the military aggression against Ukraine. It is at this
point in time premature to assess exactly the economic impact of the current
conflict because the situation is evolving by the hour. What we know is that
the two main channels through which the Euro area economy will be affected
will be through energy price and through the confidence or uncertainty
channel, not so much through trade which is limited between Russia under the
Euro area. On energy, gas, and oil prices soared on Russia's invasion of
Ukraine given the role of Russia as energy supplier, roughly 22.2% of the Euro
area energy imports. At this point in time, gas prices stand about six times
as high as one year ago. And oil price is 54% higher than one year ago.
Uncertainty is already reflected in financial markets where sentiment did
deteriorate, but with no disorderly disruption. We are currently updating our
projection for growth and inflation, which will be published on the 10th of
March at our next governor council meeting. Any number that are floating
around are, as I said, premature simply because it is evolving constantly as
we speak, and they will be refined and fine-tuned for March the 10th. On
inflation, we will evaluate the impact of rising energy prices, which are
likely in the short-term to increase inflation numbers. Persistent and
certainty though will probably be a drag on consumption and investment and
will impede growth. And given the current uncertainty that I have mentioned,
it is more than ever critically important to be guided by the two principles
of optionality and flexibility. Those are the two of the four principles that
will guide us. As I said, we operate within our mandate, price stability,
financial stability, we are data-dependent, we will move gradually, but in any
event, we will be guided by speed in case of emergency, we have done it at the
time of COVID, we will be guided by the need to maintain confidence, liquidity
will be available, we will make sure that that is the case. Payment system
will work properly and free cash will be available. And the other two
principles I have just mentioned, optionality in order to adjust to the
changing circumstances and flexibility in order to have full capacity to
respond to these times of crisis. Thank you. >> Madame Lagarde, you were just
talking about nominalization just now. Has the current situation and the
sanctions actually changed the path of these ECB normalization? Could it be
possibly delayed from the second quarter to later this year? And does that
mean that possible rate hike become less likely this year? Thank you. >> I
don't want to disappoint you, but the response to your question would be
entirely premature and inappropriate because as I just said, we have a 2%
symmetric medium-term objective, we are data-dependent, and we are going to
look at data very carefully. We will include in that the geopolitical
development, which clearly will have a bearing. But we are driven by our
mandate, which is price stability and financial stability. And we will make
those decisions comes the next monetary policy meeting, and then subsequently
June, September, December. That will be the case. I can assure you on the
basis of data and the good judgment of the governing council. >> Well, the
decisions taken by leaders last night are currently being finalized and the
full list of sanctions is going to be published in coming hours. However, I'm
not in a position to do pre-announcements before the official announcement. So
we will have to wait for official announcement. >> First question just to the
minister, you mentioned that cutting Russia out of Swift is the nuclear
option, the last resort. I'm just wondering, what else does Russia have to do
for us to arrive at that point? A question to the commissioner, EVP if you
can, I'm just wondering if you could help me understand moral quandary in
this. If Russia is so important to Europe for gas and we don't want to cut
Russia out of Swift, doesn't that raise a moral question when Europe is still
paying Russia for that gas and keeping it within the system? And then finally
to the Eurogroup, President, I realized you didn't want to talk about the
digital euro today for obvious reasons. It is a subject that I'm a little bit
nerdy about, but I'm just curious to what extent do you think, on the topic of
cryptocurrencies, that Russia could use cryptocurrencies to evade some of
these sanctions? Thank you. >>  FOREIGN  >> This is exactly why there is no
such unity of purpose inside the European Union for the implementation of the
sanction package that we have agreed today. We stand here at the president of
Ecofin, president of our central bank, executive vice president of our
commission, and myself as president of the Eurogroup, are now focused on how
we implement the package of measures that was agreed last night by our leaders
in such a way to mitigate any possibility of their avoidance. We will also be
issuing later on a full statement in relation to our deliberations today on
the digital euro. I can handle any questions on that at a later point. But
overall, the message continues to be of one of unity. Not just for considering
the future, but an absolute determination upon all of us to implement
comprehensively the measures that were agreed last night. >> Fans of both
questions are related. Well, as regards SWIFT as it has been already clear,
all options are on table. Given as potentially far-reaching implications of
cutting of Russia from SWIFT. Of course this option has to be presented to
member states also as an assessment on exact implications so that member
states can take informed choice about this option. But it's clearly that all
options are on table including SWIFT. Second question on Russia's gas supplies
and use dependency on Russia's gas supplies, it's clear that we cannot change
our energy systems energy architecture in a matter of day. So it's clear that
we have to learn lessons. We have to reduce our dependency from Russia's
supply, we need to diversify. Already when we were faced with a price hike of
energy, which was primarily driven by high prices of natural gas, European
Commission put on table proposals on organizing a joint natural gas
procurement, organizing a strategic natural gas reserve in order to be more
immune against possible energy market manipulations by Russia. As you know,
the European Commission is now actually investigating whether the current
practices of gas does not amount to the market manipulation. Because demand is
there, prices are very high, but supplies are not following. Clearly there are
question mark whether that follows market practices. We are also assessing the
question of natural gas from the opposite angle. What happens, for example, if
Russia decides to cut off gas supplies as a retaliate reaction, for example?
And our assessment is that not result problems, but we will be able to manage.
There had been a number of steps which can be taken in recent months and weeks
to allow this situation. This week as Prime Minister of Norway and the CEO of
largest in the region energy company Equinor, were in Brussels. We were
discussing those topics they were saying that they are currently supplying
more than 100% of what they can supply. So they are doing everything to help
us at this moment. So we will need to look also on diversification of supply.
So clearly this is one of the lessons we have to learn. Thank you. >> The
crypto question that you had. As you know, whenever there is a ban or
prohibition or a mechanism in place to boycott or prohibit. They're always
criminal ways that will try to circumvent the prohibition of the ban. Which is
why it is so critically important that McCall is pushed through as quickly as
possible so that we have a regulatory framework within which crypto assets can
actually be caught in a regulatory framework. And by the way, it's all very
well to be in cryptos but that's not it. You have to move from cryptos to
several coins to eventually fiat currency. Now there are ways where the DLT or
not to actually pierce that veil and to make sure that criminal activity is
actually pursued and properly dealt with. >>  FOREIGN  >> Yes. Indeed, today
we're also assessing the potential impact of current crisis, current
escalation for EU's economy. Of course, it's too early to draw some
quantitative impact because situation is unfolding and uncertainty is very
high. However, some preliminary assessments or modulations, which we have done
in the European Commission, points to the directions that, yes, it can wait on
EU's economic growth, but it's not going to stop EU's economic growth. Because
our fundamentals, economic fundamentals are strong. As you know, in winter
economic forecasts, we expect 4% growth for the EU this year and that follows
the strong rebound of 5.3% last year. EU as an economy has already recovered
all the ground lost during the COVID-19 crisis. So the baseline is that we
expect that economic activity, economic growth in the EU will continue. Even
though clearly there is conflict we'll wait on this and the impacts are going
to be unevenly distributed across countries and sectors. As regards the
question of a journal escape clause. As you know, we have been communicating
it on a number of times. We expect a journal escape clause to be dis-activated
as of 2023. However, we continue obviously to monitor the situation and we
stand ready to adjust the policy if necessary. >>  FOREIGN  >>  FOREIGN