VIENNA (MNI) – The economic and financial situation is
characterized at present by an unusually high degree of uncertainty,
European Central Bank Governing Council members Ewald Nowotny and Erkki
Liikanen said Monday.
Speaking to the press on the margins of a conference of the
Austrian National Bank, which he heads, Nowotny noted that he had
visited China and the People’s Bank of China two weeks ago, where he
discussed what role China and its huge foreign exchange reserves might
play in helping to stabilize Europe.
“There’s a high degree of uncertainty right now which is also
observed by China,” Nowotny noted. But basically, as a European and a
European central bank governor, my basic feeling is that Europe is and
should be able to solve the problems herself.”
Were China to invest in Europe, he said, “then basically they are
welcome,” but this would probably be part of a long-term trend, whereas
the debt crisis is a short- to medium-term issue that “Europe should be
and is totally able to solve.”
Liikanen, who heads the Bank of Finland and also participated in
the conference, noted the historical tendency of financial crises to be
followed by a hit to banks, a lending squeeze and then “a recession in
the real economy.”
“What is essential today is that there is a high level of
uncertainty about the future,” he said, and “the longer it continues the
more it has an impact on real developments.”
Liikanen observed that the ECB will update its staff projections
next month and declined to offer an assessment of growth prospects.
–Frankfurt bureau tel.: +49-69-720142. Email: dbarwick@marketnews.com
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