FRANKFURT (MNI) – Financial integration allows for the smooth
functioning of monetary policy and has permitted the European Central
Bank to react both quickly and successfully during the recent crisis,
ECB Executive Board member Gertrude Tumpel-Gugerell said on Friday.
“[The integration of the money market] has proven to be beneficial
in effectively providing liquidity to the market,” Tumpel-Gugerell said
in a speech to be given in Warsaw today.
However, while financial integration has its benefits, the central
banker stressed that “finance per se is not always good in any form and
size.”
“When the financial system grows too large it may eventually lead
to a misallocation of resources,” Tumpel-Gugerell said, noting that the
recent financial crisis highlighted the downside risk of large financial
markets.
While the benefits of an integrated financial system cannot be
ignored, risks to financial stability and to the Eurozone economy must
also be taken into consideration, Tumpel-Gugerell continued.
To this end, the European Systemic Risk Board (ESRB) has been
charged with the task of identifying and accessing the risks to the EU’s
financial system.
“With its involvement in the ESRB, the ECB will continue to play an
active role in safeguarding the financial stability of the euro area,”
Tumpel-Gugerell concluded.
–Frankfurt bureau: +49 69 720 142; email: frankfurt@marketnews.com —
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