The European Central Bank is doing its job “perfectly” in handling the region’s debt crisis, International Monetary Fund Managing Director Dominique Strauss-Kahn said.
Speaking to reporters in New Delhi today, Strauss-Kahn said that after Greece and Ireland, which received bailouts while “at the edge of the cliff,” some other countries in Europe are “not far from the edge of the cliff.” The whole euro region “has now to deal with medium-term fiscal consolidation,” he said.
“The European Central Bank is doing perfectly its job, and the institution that has been built six months ago for the Greek crisis, namely the so-called European Financial Stability Fund, will work as expected for Ireland,” Strauss-Kahn said.
The ECB, which today left its benchmark rate unchanged, will delay its withdrawal of emergency liquidity measures to combat “acute” market tensions, President Jean-Claude Trichet told reporters in Frankfurt today. The central bank’s bond- purchase program is “ongoing,” he said while declining to comment further on its scope.
The debt crisis that spread from Greece to Ireland now threatens to engulf the entire euro-area. Speculation the debt crisis will spread to Portugal and Spain grew after an 85 billion-euro ($111 billion) aid package for Ireland, led by European Union governments and the IMF, was authorized on Nov. 28.
Strauss-Kahn also said growth is “likely” to be sluggish in Europe.