ECB vice president Papademos says that risks to financial stability are higher than six months ago but lower than at the peak of the crisis in October. He sees global weakness in coming quarters followed by a gradual recovery. Money markets are showing signs of improvement he said.
His most interesting comment was that inflation risks from central banks expanding their balance sheets is currently nil. Much of the weakness seen in the dollar in recent days has been predicated on all the issuance by the US Treasury and the lending by the Fed will eventually feed into inflation down the road.
