Slap from Lagarde (ECB) to the warmongering EU - “We will not violate the European treaties for the Russian assets”

With a clear message to the European legislators, the president of the European Central Bank (ECB) Christine Lagarde ruled out any possibility that the ECB would act as guarantor for the European lending mechanism to Ukraine, which is based on the use of the frozen Russian assets. Speaking at the European Parliament, Lagarde stressed that the ECB “is not going to violate the European institutional framework” in order to cover any risks that would arise for the system through financial institutions such as Euroclear. “We will do whatever we can, but we will not violate the Treaty. I was not appointed president of the ECB to violate European law,” was her statement.

In recent weeks, the possibility had been put on the table that the ECB might guarantee the liquidity of Euroclear, in the event that the European plan to use the revenues from the frozen Russian assets causes financial pressures on the custodian. The ECB, noted Lagarde, cannot act as lender of last resort in such a scheme, as this would amount to indirect monetary financing of states, something explicitly prohibited by the European treaties.

The issue of Italy’s gold reserves

When asked about the politically charged issue of the amendment concerning the gold reserves of the Bank of Italy, Lagarde was also clear. “The treaty explicitly states that the ownership and management of the reserves belongs to the national central banks. Banca d’Italia is no different from any other,” she emphasized, reminding that Italy is the third largest holder of gold worldwide, a crucial element for the stability of its reserves.

Risks for the global economy

Lagarde noted that inflation is expected to remain close to the 2% target in the coming months, however the international outlook remains fragile. The risks have been “balanced” due to:

1) the summer trade agreement EU–US,

2) the ceasefire in the Middle East,

3) and the progress in the US–China negotiations.

However, uncertainty remains high due to geopolitical fluidity and the possible deterioration of the investment climate.

The tools of the ECB

Lagarde extensively highlighted the main policy tools of the ECB — OMT, TPI, and PEPP — stressing that they are designed to address crises without deviating from the mandate of the ECB. She insists that the ECB remains committed to transparency, accountability, and close cooperation with the European Parliament.

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