Lagarde On TPI's Eligibility Criteria

Q: Does the TPI mean that you are now here to close the spreads, given you said historically you wouldn’t?

• A: TPI is going to be an additional to our toolkit and it can be activated to target unwarranted and disorderly market dynamics. This will help us deliver on our mandate so our monetary policy stance is transmitted through the entire euro area. We have additional tools in our tool kit.TPI is designed for specific circumstances but is available to all countries of the euro area.

The four criteria for eligibility:

• 1. Compliance with the EU fiscal framework, either by not in the excessive deficit procedure or failing to take council recommendations.
• 2. The absence of severe macroeconomic imbalances.
• 3. Fiscal sustainability so the trajectory of public debt is sustainable – the GC will take analysis of IMF, ESM, and EC into account, alongside internal analysis at the ECB.
• 4. Sound and sustainable macroeconomic policies complying with the commitments submitted in the country’s recovery and resilience plan.