A CORUNA, Spain (MNI) – The euro area cannot allow one of its
member states to go bankrupt, European Central Bank Executive Board
member Jose Manuel Gonzalez-Paramo said Friday.
“The euro cannot permit itself a default,” Paramo told media at a
press briefing before an engagement here. “The euro is our common
destiny.”
Asked if the bank stress tests lacked the credibility needed to
calm the markets, Paramo replied, “I do not clearly see such a risk. Of
course there can be some investor or some part of the market that
maintains its doubts afterwards.”
“I think that in Europe we are very conscience of the importance
that they have and therefore there is no incentive for these stress
tests to be weak,” even if one cannot promise that the results’
publication will reassure all parties, he said.
“I can understand some resistance to conducting these tests because
there are entities that have very specific characteristics and … the
stress test can be poorly interpreted,” Paramo said.
“The stress test is not going to be that important because it is
going to produce new information, but rather also as a communication
tool,” he said.
In other comments, Paramo gave rating agencies a tongue-lashing,
saying that “since the crisis started or even before that, the rating
agencies haven’t been notable for their contribution to financial
stability” and that “lately they have been part of the problem more than
of the solution.”
“When they decide to lower the rating of a country,” he said
without identifying any particular country, that effectively suggests
the situation has worsened over the last few months.
“This is absurd,” he objected, observing that Europe now has a
Stabilization Fund and Greece is benefitting from a program supported by
the International Monetary Fund, The EU Commission and the ECB.
Paramo urged international efforts “to try to put the rating
agencies in the proper place.”
–Frankfurt bureau tel.: +49-69-720142. Email: dbarwick@marketnews.com
[TOPICS: MT$$$$,M$X$$$,M$$EC$,M$$CR$,MGX$$$]
