WASHINGTON (MNI) – The last round of bank stress tests in Europe
should be treated as a serious effort to uncover weaknesses, and it
produced a credible result, European Central Bank Governing Council
member Ewald Nowotny said Friday.

Speaking to journalists during the Annual Meeting of the IMF and
World Bank, the head of the Austrian National Bank said, “I would like
to emphasize that one should take this stress test thoroughly seriously.
There is a certain tendency to dismiss it as not credible. I think it
was indeed credible.”

Nowotny called it “certainly right that in difficult times, there
is certainly additional need for capital, as is envisaged under Basel
III.”

In the current environment, he said, “what doesn’t make the matter
easier is that the stock prices of banks have fallen, with which a
recapitalization of banks naturally becomes more difficult.”

The markets at the moment “are so nervous, and in part so
irrational,” he said, that the best thing to do is implement the
decisions that have been taken.

–Frankfurt bureau tel.: +49-69-720142. Email: dbarwick@marketnews.com

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