BRUSSELS (MNI) – Europe’s banks must recapitalize so that they can
provide credit to the rest of the economy, and a transaction tax would
obstruct that goal by weakening them, European Central Bank Executive
Board member Lorenzo Bini Smaghi said on Wednesday.
Speaking to the European Parliament’s Committee on Economic and
Monetary Affairs, Bini Smaghi said: “We need banks to be recapitalized
in order to provide credit for the economy.” A transaction tax would
produce a “weakening” of the banks at a time when they need to
recapitalize, he added. “It’s not the right moment now. It had better be
done in good times but not in bad times like we are in now.”
Nonetheless, Bini Smaghi noted that credit to the household sector
in Europe has been picking up in some countries.
“What is happening in Spain is happening all over Europe,” he said.
“In Spain we have seen some credit to the household sector picking up.”
But he stressed that the situation nevertheless remained
“difficult” and that is why Europe should ensure that its banks are
“recapitalized and restructured.”
[TOPICS: M$$EC$,MT$$$$,M$X$$$,MGX$$$,M$$CR$]
