Draghi: Any country leaving euro zone must settle ECB bill first

25th January 2017 Newsroom Europe 0

TheEuropeanCentralBank / tribune.com.pk
The Express — The European Central Bank has threatened Italy with an almost certainly unpayable bill if the country’s citizens take the democratic decision to quit the troubled euro.

ECB chief Mario Draghi  said in a letter to two Italian MPs that  “If a country were to leave the Eurosystem, its national central bank’s claims on or liabilities to the ECB would need to be settled in full.” Countries looking to axe the single currency will have to pay back all their debts to the ECB  in one go before they can leave, making such a move unaffordable.
He did not however specify  what the ECB could do in response if a country did not “settle its claims in full”.
The pronouncement comes after prominent politicians in a number of member states including Italy, France, Greece and the Netherlands have all made noises about ditching the euro. 

Eurosceptic chiefs in Paris and Rome have promised to hold referendums on their countries’ membership of the eurozone if they sweep to power in a major crisis for Brussels.

The Five Star Movement is leading the polls in Italy whilst Marine Le Pen is currently on course to win the first round of the French presidential election. 

Italy’s liabilities to the ECB stand at €358 billion with the country having had to borrow huge sums of money from Brussels to stave off years of economic stagnation which many blame the euro for.
Even if Italian voters chose in a referendum to leave the single currency and return to the lira, it is unclear how the country’s Government could raise enough cash to pay off such a mammoth bill in one go.

France’s deficit is a more manageable €38bn while Greece’s debts to the ECB is €30.5bn but being forced to stump up such amounts would be difficult.

The latest polling figures, published by the EU’s Eurobarometer survey in October last year, show that support for the euro has tumbled across the bloc over the last 12 months.

In Italy 47 per cent of voters now think the single currency is bad for their country, compared to 41 per cent who believe it has a positive effect on the economy.

And in France backing for the euro fell saw a negative swing of 10 per cent in the space of a year, with 53 per cent now in favour of the EU-wide currency and 37 per cent against it.