MOSCOW (MNI) – March inflation in the Eurozone should not be all
that much different than what it has been in the recent past, ECB
Executive Board member Lorenzo Bini Smaghi said Wednesday.
Asked whether the ECB’s view of the inflation outlook has changed
since early March, Bini Smaghi told reporters at an event on banking
supervision here that “we take the numbers as they come.”
“Next week we have a Governing Council meeting and we will decide,”
he said observing that Germany just published March annual inflation and
that Eurozone data for March would come out Friday.
“But we don’t expect that it is that different than what it was in
previous months,” he said.
Queried on whether Irish banks posed a systemic risk, Bini Smaghi
observed that stress test results would be published tomorrow. “We
expect the government to stand ready…to recapitalize the banks in a
way that will reassure the markets,” he said.
In other comments during a briefing, which mainly dealt with bank
supervision, Bini Smaghi affirmed that there had been “two philosophies
in banking supervision before the crisis — light touch and hands
on…light touch does not work.”
A hands on approach is the best way to limit demands on taxpayers,
he said arguing that supervision should make sure “that banks can absorb
the crisis without taxpayers’ money,” if there is another crisis in the
future.
“Markets are currently penalizing the banks, which are not
adequately capitalized” via higher interest rates among other things, he
said.
Basel III is not the only avenue by which banks confront demand to
get themselves in shape, he said. “There is also the discipline of the
markets, which at this moment are requiring banks in various countries
to recapitalize.”
–Frankfurt bureau, +49-69-720142, dbarwick@marketnews.com
[TOPICS: M$$EC$,M$X$$$,MT$$$$,MGX$$$,M$$CR$,M$I$$$]
