HELSINKI (MNI) – The global economy has come back strongly
following the crisis but considerable threats remain, European Central
Bank Governing Council member Nout Wellink said Friday.
Speaking at the anniversary celebration of the Bank of Finland, the
Dutch National Bank head said that “the world economy has recovered
strongly since 2009 and is improving further.”
However, he noted, financial tensions remain and the financial
sector overall continues to exhibit fragility.
“Going forward, significant risks remain,” he said, making it
“critical” that the resilience of the global banking sector be
strengthened.
Wellink noted the difficulty of forecasting “with any precision”
all the ramifications for the banking sector of Basel III capital
requirements. “Assessing the long-term market impact of Basel III is
difficult, since banks may change their business model.”
However, he said, the long-term effects should include greater
financial stability, which is “good news for monetary authorities,” and
reduced volatility in financial markets as a result of improved
confidence.
“Bond markets may be affected by changing preference for banks to
hold” particular asset classes, he said. To the degree banks meet
requirements by modifying their pool of liquid assets, “this can lead to
shifts in the demand for sovereign bonds,” he added.
–Frankfurt bureau tel.: +49-69-720142. Email: dbarwick@marketnews.com
[TOPICS: MT$$$$,M$$CR$,MGX$$$,M$$EC$,M$X$$$]
