EU officials involved in the deliberations cautioned that the suggestion was rejected by eurozone finance ministers at the meeting and insisted that Mr Draghi’s idea was part of a free-flowing debate rather than a firm policy proposal. “This was just an open discussion without operational results”, said one person involved in the talks.
The ECB declined to comment on Mr Draghi’s intervention. “The ECB provides advice when requested”, it said. “The ECB’s advice aims to ensure that treatment of senior bondholders is in line with EU rules.” Still, for an institution that has long resisted any leeway in paying private investors what they are owed – Mr Trichet fiercely resisted Greece’s sovereign bond default last year, for example – Mr Draghi’s change of heart is significant.
“Draghi is moving in the right direction, towards a proper resolution mechanism where everybody gets hit”, said Lucrezia Reichlin, a former ECB director of research. “This is very different from past policy and it is going to create market tensions if not managed properly.”
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