ECB Backs Dijsselbloem's Liquidation Policy "Template"

Tyler Durden's picture

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.

Via Reuters,

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.