Mr. Mario Draghi:

Thank you. The Chairman raised many issues but the ECB cannot do much about most of them. Again, our duty is to go with our mandate and try to deliver it. We are doing this with our monetary policy and interest rates that are as low as they have ever been.

The Chairman mentioned non-performing loans, NPLs, and the ECB is not pushing that disposal. There is a dialogue that is going very well between banks and the ECB all over the eurozone about disposal of NPLs. The Chairman mentioned that if these NPLs did not stay on the balance sheet of banks, they could lower their lending rates because costs would be lower. In a quasi-monopoly or monopoly position, if costs are lowered, it would also be possible to lower rates. We said before that disposal of NPLs is not a simple matter, and it is not simple from a social viewpoint either because many of the NPLs are with people who cannot pay. They are poorer people. That social problem should be addressed with social or budgetary measures rather than interfering with the interest rate-setting mechanism, as that would probably sometimes undermine banks' stability.

That is the first rough answer that I feel like giving.

More specifically, I am grateful for the question on Mr. Sugarman. There is a good opportunity for me to say everything about that. I already discussed this matter in a written answer to a Member of the European Parliament, Mr. Flanagan, dated 22 December 2016. This letter is published on the ECB's website, so if people want to know, they can look at that.

The case of UniCredit, which the Chairman raised in line with the established principle of separation between monetary policy and banking supervision, falls in the competence of the chair of the ECB supervisory board, Danièle Nouy. I cannot comment on supervisory measures taken with respect to an individual bank. I will address the Chairman's questions by first clarifying what powers the ECB banking supervision has to address breaches by significant banks. We have a variety of supervisory tools at hand, including sanctioning powers. I will save the committee from the list of all the powers that we have because it is a long list, but I reassure members that in my previous capacity as governor of Banca d'Italia, I was never notified of the issue the Chairman raised. I understand, as was stated publicly before this Parliament, that the Central Bank of Ireland carried out an in-depth investigation into this case and considers the matter to be closed. It has been discussed, it is on the website, everything has been done and measures have been taken. I cannot comment on the specific measures. As the governor of the other side of the bank, I was not notified and did not know anything. The Central Bank of Ireland fully inquired and declared the matter to be closed.

I completely agree that we have to look at people. We are doing that in pursuing our mandate to the best of our ability.

Vulture funds are a big development in the euro area. The size of the EU non-banks financial sector increased on average by 83% annually between 2012 and 2015. Bond funds, which the committee calls vulture funds, have increased liquidity transformation, credit and interest rate risk taken. The European exchange-traded fund sector remains small compared with traditional mutual funds, but further regulatory work is needed. Until recently, people used to say that since the non-banking sector does not have deposits, it is different from banks and does not need to be regulated. This is not true any longer. These non-banks do exactly the same things as banks. They finance the economy, take deposits and give credit. They are very interconnected with other institutions. They deserve to be regulated. The ECB recommended that this work would proceed further and especially that macroprudential tools would be extended to the non-banking sector, including what the Chairman mentioned before, the vulture funds.