ECB Backs Dijsselbloem's Liquidation Policy "Template"
It appears the European Central Bank is having trouble keeping its lies straight. When Jeroen Dijsselbloem ("Diesel-BOOM", "D-Boom", or just "Diesel") made his now infamous "template" comment last week, reality was shattered for many trend-following, momentum-monkey, hope-and-dreamers that actual real monetary pain could exist for a bank that was entirely incompetent (and insolvent). Instantly the rest of Europe stepped up to deny-deny-deny (as did D-Boom himself) explaining this was a 'unique' situation with French ECB Director Benoît Coeuré explicitly stating that Cyprus is not a model for future bank rescues.
However, as Reuters reports, it appears fellow-Dutchman and ECB Governing Council member Klaas Knot said last night that there was "little wrong" with J-Boom's comment and that "the content of his remarks comes down to an approach which has been on the table for a longer time in Europe. This approach will be part of the European liquidation policy." Further confirming D-Boom's perspective, Knot added that, "there has to be transparency about losses in the banking sector... and banks have to wind down their loss-making operations."
It seems that in 2012 the ECB split was between the Germans and Draghi on unlimited inflation threats; in 2013 it will be between those who want bail-ins and bail-outs.
European Central Bank Governing Council member Klaas Knot said on Friday there was "little wrong" with Eurogroup chair Jeroen Dijsselbloem's recipe for dealing with future euro zone banking crises, a newspaper reported.
Those comments - which Dijsselbloem later rowed back on -prompted a market selloff and led two other ECB policymakers, including executive board member Benoit Coeure, to say on Tuesday that Cyprus was a unique case.
But Knot, who sits on the bank's main decision-making body, said: "There is little wrong with Dijsselbloem's remarks.
"The content of his remarks comes down to an approach which has been on the table for a longer time in Europe. This approach will be part of the European liquidation policy."
In a speech on Thursday night in Amsterdam, Knot said euro zone banks needed to clean up their balance sheets by winding down loss-making operations.
"Firstly, there has to be transparency about losses in the banking sector. Secondly, banks have to wind down their loss-making operations," Knot said.
And now, once more, this time with feeling: Diesel-BOOM.