Mr. Mario Draghi:

I am aware lending rates by banks to users, be they consumers or mortgage holders, are high. However, one should ask why they are high. The evidence seems to say it is because the banking market is not competitive and there are monopoly or quasi-monopoly situations here. The way to address this is twofold. First, it requires actions to reduce the degree of monopoly and actions to increase the competition among banks and, by the way, other non-bank institutions that may finance the economy. The second way is basically what the EU is doing to complete banking union and to give a convincing signal to create a genuine capital market so that cross-bank lending, cross-bank purchases and master netting agreements, MNAs, across countries can be undertaken so as to increase the competition. Although it might take me too much time and the Deputy might not approve, we can discuss the benefits of creating a capital market union that would go well beyond the fact that interest rates would go down and borrowers would be in better condition. These are the two types of actions.

As to what can be done at EU level, as I said in my introductory statement, we must try to harmonise the legislation and regulations in different countries, which, by the way, are considered the main barrier to cross-country bank lending. For example, there are different regimes for mortgages across different countries which prevents cross-country lending. Second, countries must take domestic actions geared to increasing competition.

The second point is about whether our anticipation of ending the net asset purchase programme will create an increase in interest rates on sovereign debt. The answer is that we do not think so. We expect our monetary policy to stay very accommodative, even after the end of the net asset purchase programme, because of our formal guidance on interest rates, when we said interest rates will stay at the present level, at least through the summer of 2019. In these years we have accumulated a very sizeable stock of bonds and will continue reinvesting in these bonds as they come due for an extended period of time.

As I always remind people, we keep a lot of optionality in our message and monetary policy guidance. If things were to get worse, we could always extend the period and change our forward guidance consistently with the incoming information.