More On Draghi

Comments from ECB President Draghi reiterating that the commitment to the euro is "vastly under-estimated" has helped the euro claw back its earlier losses entirely and a move above $1.2855, especially on a close basis, would be a very constructive technical development. 

Draghi seemed to get frustrated at the press conference with hypothetical questions about a Cyprus exit. Draghi noted that there is no Plan B. Draghi also argued that Cyprus is neither a turning point nor a template. 

This has been our view as well. Each episode during the crisis has seen European officials innovate and build institutional capacity. It is not quite the same EU or ECB as it was in 2010 when the Greek revelations were first made. 

Separately, Draghi noted that Emergency Lending Assistance does not have seniority. ELA is loans from a national central bank to local banks, with the ECB's approval, but at the risk of the local central bank. Banks turn to the ELA facility when they do not have collateral acceptable to the ECB. This seems to throw the ELA out of the official sector and toward the sector that can participate in haircuts and losses