MARIO DRAGHI: 'Cyprus Is No Template'

Business Insider

The ECB's monthly interest rate decision is out .

The central bank elected to leave the benchmark refinancing rate unchanged at 0.75 percent and the deposit facility rate on hold at 0 percent, as expected.

During the press conference, Draghi said the ECB expects a gradual recovery in the second half of 2013, but that it is subject to downside risks. He also once again reiterated that the ECB's monetary policy stance will remain accommodative as long as is needed.

Draghi said the discussion surrounding the rate cut was extensive, but the general consensus for the time being was to not look at rates. He also said the ECB does not "pre-commit" to future rate cuts.

On the Cyprus bailout, Draghi said the ECB had presented a proposal wherein no bail-in from insured depositors was foreseen. He said that all of the proposals from the European Commission and the IMF had the same feature.

Draghi said the decision to bail in insured depositors was the outcome of a meeting between euro zone officials and the president of Cyprus.

"That was not smart," said Draghi.

The ECB president went on to say that thanks to the announcement of OMT, "we are now in a position to cope with serious crises without them becoming existential or systemic."

He also sought to stress that "Cyprus is no template."

Draghi asserted that bail-ins were not a problem in and of themselves, but they become problems when not all parties involved know the rules of the bail-in.

Draghi also said he thinks a euro exit is no solution for Cyprus, warning that such a decision would face many big risks.

"What was wrong with Cyprus's economy doesn't stop being wrong if they are outside the euro," said Draghi.



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