MOSCOW (MNI) – The downside growth risks due to fiscal imbalances
and bank funding difficulties appear so far to be limited to a small
number of Eurozone states, representing a small proportion of the
monetary union’s economic activity, European Central Bank Executive
Board member Lorenzo Bini Smaghi said on Wednesday.
However, “potential contagion to other EU or euro area countries is
not insignificant,” the central banker warned in the text of a speech
given here.
Speaking at an event held at the Bank of Russia, Bini Smaghi also
noted the “considerable” risks from “the re-emergence of global
imbalances and any disorderly unwinding.”
“Moreover, the catastrophe in Japan and tensions in the Middle East
show us that risks of various sorts (natural, geopolitical, etc) are
never far away,” he added.
Regarding the European bank stress tests, the results of which are
scheduled for release in June, Bini Smaghi underscored that the success
of the tests hinged on the full understanding of them by market
participants.
“It is thus essential that supervisory authorities coordinate
closely within the EBA their communication strategy,” Bini Smaghi said.
“Its no time for cacophony, nor for national authorities to engage in a
beauty contest.”
— Frankfurt bureau: +49 69 720 142; email: frankfurt@marketnews.com —
[TOPICS: M$$EC$,M$X$$$,MT$$$$,MGX$$$,M$$CR$,M$I$$$]
