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12 December 2013 By George Hay Follow @gfhay

President Mario Draghi seemed to contradict ECB executive board member Peter Praet by hinting he’s not about to demand capital against euro zone banks’ sovereign debt. Investors can expect more mixed messages. It’s hard to gee up lending while trying to become a tough regulator.

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European Central Bank president Mario Draghi said on Dec. 12 that the bank would not unilaterally assign risk weightings to the various government bonds on the euro zone banks’ balance sheets.

Steps to that effect should be agreed upon globally, Draghi told a question-and-answer session at the European Parliament. He added that treatment of sovereign debt in next year’s stress tests was a different issue.

Also on Dec. 12, ECB executive board member Peter Praet told the Financial Times that bank stress tests before the ECB takes over supervision of the currency bloc’s banks next year would help liquidity provision as they would look at the risk in banks’ government bond holdings as well.

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