–Key ECB Concern In The Debt Crisis To Avoid Negative Spillover
LONDON (MNI) – The risks to the European Central Bank’s balance
sheet are manageable and are not the reason behind the central bank’s
views on how the sovereign crisis in the periphery of the zone should be
tackled, Bank of Finland Governor and ECB Council Member Erkki Liikanen
has said here.
“Central banks can sometimes make losses, we know it. But the risks
from the balance sheet point of view are manageable,” he said.
The ECB’s main motivation in the sovereign debt crisis has been to
avoid wider negative effects and contagion. Liikanen stressed the ECB
stance that credit events or selective defaults should be avoided.
Speaking to the European Economic and Finance Centre here,
Liikanen said that the problem states of the zone needed to start
running primary surpluses and implement structural reforms to get growth
moving.
“It’s very important to create primary surpluses. If you don’t
create primary surpluses, it’s very difficult to have a stable path for
your fiscal or economic policies”.
IMF/EU bailouts could only provide temporary help to these states
in order to avoid contagion and “buy time”.
Responding to questions about the ECB’s monetary policy stance,
Liikanen only echoed comments made by other ECB officials. He said the
‘strong vigilance’ mantra only meant that a rate hike at the following
policy meeting was possible but he stressed that there was no
pre-commitment.
–London Bureau; email: ukeditorial@marketnews.com; tel: +0442078627492
[TOPICS: M$$EC$,M$X$$$]
