SocGen Chief Says Policymakers Must Avoid ‘Major Disappointment’
European policy makers have shown a “strong commitment” to the euro and must now avoid a “major disappointment” as they tackle the debt crisis, said Societe Generale SA (GLE) Chief Executive Officer Frederic Oudea.
“Yes it might take time, but a commitment is there, by the governments, by the European Central Bank,” Oudea said in a Bloomberg Television interview near Versailles, France, today. “August was a positive month for the European banking system.”
ECB policy makers meet in Frankfurt on Sept. 6 and President Mario Draghi is expected to announce details of the bank’s latest efforts to lower the borrowing costs of countries such as Spain and Italy. Draghi announced on Aug. 2 that the central bank may resume bond purchases if distressed governments ask for aid from the region’s bailout funds.
ECB Executive Board member Joerg Asmussen said this week the central bank is still working on the specifics of the new program, which council members will discuss at next week’s meeting. He also said he wants either the European Financial Stability Facility or the permanent European Stability Mechanism to buy debt in the primary market before the ECB makes any purchases of its own.
For that to happen, a country must formally apply to the bailout fund and agree to conditions set out in a memorandum of understanding, which neither Italy nor Spain have done.
“Things are moving forward” regarding measures to support the Spanish banking system and authorities must keep “ensuring that there is an answer,” Oudea said.
To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at firstname.lastname@example.org