VIENNA (MNI) – The outlook for economic growth throughout Europe is
worsening, European Central Bank Governing Council member Ewald Nowotny
said Thursday.
Speaking on a panel at a conference taking place at the Austrian
National Bank, which he heads, Nowotny said, “As you know, growth
perspectives all over Europe are deteriorating.”
“This kind of deteriorating perspective has been the [reason for]
the ECB to lower its interest rate for the first time in history to
under 1%,” he added.
Nowotny called it “quite obvious” that weak growth in euro area
countries will have a negative effect on neighboring countries, where it
is necessary to have “sustainable real economic growth that is not due
… to unnaturally low interest rates.”
He called for a further reduction of the role of foreign exchange
lending, noting that “to some extent we have been successful, with the
flow, but of course we have a huge stock of it.”
Turning to banks’ refinancing needs throughout Europe, Nowotny
observed that the ECB’s long-term refinancing operations had been
intended to address this.
“We did this because we knew about the challenges that we have,” he
said. “We will see to what extent we will be able to solve this by the
markets, because this has to be refinanced by the markets. So this is
the main challenge that European banks are facing today.”
-Frankfurt bureau tel: +49-69-720-142. Email: dbarwick@marketnews.com
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