–Adds Comments On Bank Lending, Sovereign Debt Holdings
PARIS (MNI) – Bank of France Governor Christian Noyer said Friday
he did not expect financial markets to attack the country’s sovereign
debt but vowed to resist any speculation of this sort.
“I would fight with determination any speculative movement on
French debt, if this should take place, which I exclude,” Noyer said in
response to journalists’ questions after the presentation of the central
bank’s results for 2011.
“In general, I would be extremely attentive to whatever could
happen to French debt,” said Noyer, who is also a member of the
Governing Council of the European Central Bank,
The best way for the next French government to reassure the markets
is to reaffirm with clarity the commitment to bring public finances into
balance and reduce the debt over the medium term, he said.
“Continuity” in the “march toward balanced budgets” must be
maintained, Noyer said, explaining that markets become alarmed when
there are unpleasant surprises in fiscal policy.
The government elected in May should thus be “very clear on the
continuation of the path toward reduction of deficits and debt,” he
said, noting that this is the basic scenario of the mainstream
candidates for the presidency.
Markets also pay attention to economic growth prospects, as this
facilitates the reduction in the debt ratio, he added, noting the key
role that structural reforms to boost potential growth play in
consolidation programs.
Noyer said there was no evidence for a significant reduction in the
credit offer of French banks and that any slowdown in lending was linked
more to demand. In the case of the drop in mortgage lending in recent
months, this could be due both to the decline in real estate
transactions and to housing price trends.
Noyer explained the “re-nationalization” of holdings of sovereign
debt as a reaction to market pressures. “I hope this is temporary and
that we will return to normal,” he said.
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