LISBON (MNI) – ECB Governing Council member Carlos Costa warned
Monday of liquidity and solvency risks in the banking sector and urged
banks to increase capital to restore confidence.
“Banks have to strengthen their capital to stop the restriction of
liquidity and restore confidence,” the governor of the Bank of Portugal
said at a meeting here with central bank governors of
Portuguese-speaking countries.
Costa called for very prudent rules containing preventive measures.
“There have be measures put in place that avoid contagion effects,” he
said. “Self-regulation is not enough. Self-regulation needs to be
flanked by rules that oblige us to take on prudent back-up measures.”
Banks play a fundamental role in the economy by channeling funds to
economic agents, he underscored. “Financial stability is essential for
economic growth.”
The global financial and economic crisis shows that Eurozone
economic governance is insufficient, Costa said. “It is not possible to
have efficient management without European and international
co-ordination and cooperation.”
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