–Says Eurozone Banks Can’t Rely On ECB Support Forever
BRUSSELS (MNI) – Eurozone banks can’t depend on the European
Central Bank’s exceptional measures forever and the central bank is
likely to continue to withdraw the support next year, National Bank of
Belgium Governor Guy Quaden said in an interview published by a Belgian
national newspaper on Wednesday.
“The unconventional measures are by definition temporary,” Quaden
told L’Echo. “We have started to dismantle them carefully. It is
preferable and likely that this process continue next year. The banking
industry can not depend on the exceptional credit of the ECB forever.”
At its last meeting, the European Central Bank extended some of its
unconventional measures and said it would keep them in place for as long
as is necessary, though ECB President Jean-Claude Trichet insisted at
the same time that the bank was engaged in a gradual process of
withdrawing them.
Quaden, who sits on the Governing Council of the European Central
Bank, said the central bank’s baseline scenario for the Eurozone economy
“remains that of relatively low growth and uneven across countries,
without a relapse into recession.”
“The Governing Council does not scream victory so far,” he said.
“We are aware that this is at least partially, especially in Germany, a
catch-up phenomenon.”
The Governor told the newspaper that the ECB’s measures and the
creation of the European Financial Stability Fund “have avoided the
worst” of the sovereign debt crisis — “namely the collapse of the
market for public debt in several countries.”
Asked about prices, Quaden said he thought “deflation is as
unlikely as strong inflation.”
–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com
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