ECB's Asmussen Says Euro Woes Won’t Dominate IMF TalksRainer Buergin and Stefan Riecher
European Central Bank Executive Board member Joerg Asmussen said the euro-area financial crisis will no longer dominate international talks this week in Washington the way they did as little as a year ago.
Japan’s economic situation, fiscal and monetary policies in the U.S. and slowing growth in some emerging economies will also be among the main topics to be discussed at the annual meeting of the International Monetary Fund and gatherings of finance ministers and central bank governors of the 20 biggest economies, Asmussen said in a speech in Potsdam, Germany.
“Our partners globally acknowledge that we have made progress in Europe, in the euro zone, in the last 18-24 months,” the former Germany deputy finance minister said. “It is no longer the crisis in some euro-zone countries that will be the focus of discussions in Washington.”
IMF Managing Director Christine Lagarde in an Oct. 3 speech said it’s “mission-critical” for the U.S. to raise its $16.7 trillion debt ceiling, warning policy makers that failure to do so would seriously hurt the country and the world.
Net capital inflows in security investments of around 100 billion euros ($136 billion) in the last 12 months show that investors are returning to the euro area, Asmussen said. Notably, U.S. investors are buying peripheral countries’ bonds with long maturities again, he said.
The share of Spanish debt held by non-Spanish investors has increased to about 35 percent, Asmussen said, a “clear increase” over the last 12 months. The portion of European shares that’s overweighted at some investment funds is at the highest in six years, he said.
“Investors are returning to Europe because they have confidence in the crisis management, in the changes we’ve applied in the euro zone,” Asmussen said.