Noyer Says Steps to Exit Crisis Are Starting to Bear Fruit
Bank-funding market and money-market conditions are “much better,” Noyer said at an event in New York today. In addition, sovereign-debt market “tensions” have also eased, and the economy is “stabilizing,” albeit at a low level, he said.
Stocks fell and the euro weakened today as Europe’s backlash against budget cuts gained momentum. Dutch Prime Minister Mark Rutte’s minority government lost the support of the opposition Freedom Party amid a revolt against spending cuts. French President Nicolas Sarkozy lost the first round of his re-election bid as the anti-euro National Front won a record share of the vote.
Noyer said there remain challenges to be addressed, and that each euro country must achieve “strong fiscal consolidation while ensuring long-term growth.” The banking system must also “ensure that the economy is properly financed while strengthening the financial sector,” and the European economic union must also be reinforced, he said.
“The Eurosystem is providing the European economy with key elements of stability,” Noyer said. “We are providing price stability,” he said, adding “our recent exceptional and temporary measures should be seen as a window of opportunity for banks to strengthen their balance sheets and for governments to step up their efforts in a less troubled financial environment.”
Officials in Europe and around the world are bickering about additional crisis-calming steps, as turmoil returns amid concern that Spain may need a bailout. While ECB officials say Spain and Italy need to agree on further action, Prime Minister Mariano Rajoy’s government wants the ECB to reactivate its bond- buying program.
The central bank said today it didn’t settle any government bond purchases for a sixth straight week, having halted the program after its two three-year loans to banks totaling more than 1 trillion euros initially helped debt markets to rally.
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