ABU DHABI (MNI) – Markets are not as confident in European
governments as would be justified by facts, Bundesbank board member
Andreas Dombret said Thursday.
Speaking here at a seminar of central banks of the Eurozone and the
Gulf countries, Dombret affirmed that “progress in the various countries
can be seen in Ireland, for example, but also in Italy, where the new
government is going to implement fiscal measures. They can build on what
is essentially a sound economy. Therefore, my…message is this:
‘European sovereigns deserve more confidence than markets are currently
willing to give them.'”
Asked by international investors why they should buy sovereign debt
from European countries whose partners close to home are reluctant to
purchase more from, Dombret replied that, “European partners have to be
aware of moral hazard implications, because they are players in the
European political game.”
“Investors outside Europe need not take into account moral hazard
implications,” he added. “They can and should buy such bonds because
they have confidence in the long-term sustainability of the fiscal
position of the countries in question, and because they are interested
in portfolio diversification.”
–Frankfurt bureau tele.: +49-69-720142. Email:@marketnews.com
[TOPICS: MGX$$$,MT$$$$,M$$EC,M$X$$$,M$$CR$]
