FRANKFURT (MNI) – The crisis affecting the world economy is without
doubt a global one rather than just a problem for Western countries,
European Central Bank Governing Council member Marko Kranjec said in an
interview published Friday.

The head of the Bank of Slovenia, asked by the weekly Mladina why
people refer to a global crisis if China isn’t affected, said, “It is
definitely a global crisis. If developed countries decide to stop
importing and we witness protectionism, it can only be a global crisis.”

He added, however, that “developed EU countries and the USA got
into a position where public debts are much higher as they used to be,
which means that confidence in the reliability of these countries can be
damaged.”

As a small economy, Slovenia depends on larger countries in Europe,
he said. “If Germany is growing, we will grow as well.” However, reform
is necessary too, he urged.

Kranjec disagreed that the financial sector had not changed in the
wake of the crisis, despite the debate about stricter supervision.

“Many things have changed. Systems that had control outside of the
central bank decided to put it back under the umbrella of central
banks,” he reasoned.

“We have to be aware of the fact that the central bank is the only
institution that can alleviate the consequences of the crisis by
providing liquidity in the markets,” he continued. “If we weren’t doing
that, the difficulties would be even bigger.”

Kranjec noted the establishment of a European committee to consider
systemic risk with the participation of all financial market regulators,
and he affirmed that Basel III “has fundamentally changed the policies
of individual banks, particularly investment banks.”

“From now on, venture capital and rating agencies will also be
under stricter control,” he said. ” As you know, 95% of the ratings are
controlled by three American privately owned companies, so the EU is
considering establishing its own credit rating agency.”

In addition, he argued that whereas before the crisis it would have
been unthinkable for governments to influence bank managers’ earnings,
“from now on salaries and bonuses in the banks won’t depend on the
quarterly, but the long-term results.”

Slovenia’s domestic banking sector is “definitely in a better
position than for example Irish and Greek banks,” he said.

–Frankfurt bureau tel.: +49-69 720142. Email: dbarwick@marketnews.com

[TOPICS: M$$CR$,MGX$$$,MT$$$$,M$$EC$,M$X$$$]