You tell me, is Mario Draghi being shameless, or is he just ignorant?

In a speech before the French National Assembly in Paris, 26 of June 2013, Mario Draghi, the President of the ECB, said:

“The ECB has been very active in responding to the crisis. We have robustly defended the stability of our monetary union and therefore of our money. And we stand ready to act again when needed.

However, it is important to acknowledge that there are limits to what monetary policy can achieve. This is not a question of the scope of our mandate. It is fundamentally about what different institutions are empowered to do.

One pertinent example is the current shortage of credit for many households and small- and medium-sized enterprises. Credit provision requires funding, capital and a positive risk assessment. The central bank can help ensure funding and address macroeconomic risk. But it cannot provide capital, nor can it affect banks’ assessment of the creditworthiness of individual borrowers.

Similarly, monetary policy cannot create real economic growth. If growth is stalling because the economy is not producing enough or because firms have lost competitiveness, this is beyond the power of the central bank to fix.”

And I repeat: “the current shortage of credit for many households and small- and medium-sized enterprises… The central bank … cannot provide capital, nor can it affect banks’ assessment of the creditworthiness of individual borrowers”

And this is the same Mario Draghi who for many years chaired the Financial Stability Board, that which fully endorsed the Basel bank regulations.

The central bank, though more precisely the regulators, do “not affect banks’ assessment of the creditworthiness of individual borrowers”, but, since they decide how much bank equity goes with each one of those assessments, they decide how much risk-adjusted return on equity banks should expect from each individual borrower. 

And since Basel regulations, allow banks to hold much less capital when lending to “The Infallible” than when lending to “The Risky”, the banks earn much higher expected risk-adjusted return on equity when lending to the AAAristocracy, than when lending to the “many households and small- and medium-sized enterprises”

And that constitutes precisely the fundamental cause for “the current shortage of bank credit to many households and small- and medium-sized enterprises”.

And that is so especially now, given the immense bank capital shortage that has resulted from for instance having allowed banks to lend to ("almost infallible") Greece holding only 1.6 percent in capital, something which implies a mindboggling allowed leverage of equity of 62.5 times to 1.

And so, you tell me, is Mario Draghi being shameless, or is he just ignorant?