BERLIN (MNI) – The global financial crisis is not yet over and
setbacks in financial markets cannot be ruled out, ECB Governing Council
member Axel Weber said in remarks prepared for delivery on Wednesday.
“Even though financial markets have calmed again they are still
marked by heightened uncertainties and are not immune to setbacks,”
Weber, who heads Germany’s Bundesbank, reasoned.
However, the economy has developed better than expected at the
start of the year, he observed. “Thus, I do not share fears of a double
dip recession or a deflation,” he said.
Still, he warned not to get carried away “and proclaim the end of
the crisis and return to business as usual.”
Weber reckoned that the “the direct and indirect consequences [of
the crisis] will occupy us still for years,” noting that there exists a
large need for reform in the financial sector.
Stiffer capital rules for banks won’t hurt the economy, Weber
reckoned, pointing out that there are generous transitional periods
planned until new rules kick in fully. “The new rules will come and they
will increase the stability of banks,” he predicted.
Weber, praised the German government’s recent bank insolvency draft
which would allow an orderly unwinding of troubled systemically-relevant
banks. “Overall, I welcome and support this project of the federal
government,” he stressed.
Yet, in order to avoid distortion of competition, a coordinated EU
approach would be desirable, Weber added.
–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com
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