FRANKFURT (MNI) – The crisis has reached systemic dimensions
threatening Eurozone financial stability and the health of the real
economy, European Central Bank President Jean-Claude Trichet said
Tuesday.
“The crisis has reached a systemic dimension,” said Trichet, who
was testifying as the head of the European Systemic Risk Board.
Stresses in many European government bond markets most recently
have “been aggravated by the progressive drying-up of bank term funding
markets,” Trichet said.
“The high interconnectedness in the EU financial system has led to
a rapidly rising risk of significant contagion. This threatens financial
stability in the EU as a whole and adversely impacts the real economy in
Europe and beyond,” he warned.
Going forward, “the main issue for us is to restore the credibility
of the sovereign. If we do not have the credibility of the sovereign
signature, we do not have the backstop if we have a new crisis,” Trichet
said.
Trichet observed that there is a global crisis of sovereign risk
even if Europe is at its epicenter.
— Frankfurt newsroom: +49-69-720142; email: frankfurt@marketnews.com
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