–Says ECB Will Extend Relaxed Collateral Rules To Aid Econ
BRUSSELS (MNI) – Europe’s economic recovery is in progress but the
crisis isn’t yet over, European Central Bank President Jean-Claude
Trichet said on Thursday, as he announced plans to extend the European
Central Bank’s relaxed collateral framework.
“An economic recovery is in progress, but this does not mean that
the crisis is over,” Trichet told lawmakers in the European Parliament.
“For one thing, we know that the pace of recovery will be uneven
and we cannot rule out setbacks,” he said.
Trichet said the ECB would keep the minimum credit threshold on its
collateral eligibility at investment grade level BBB- “beyond the end of
2010.”
“In parallel, we would introduce, as of January 2011, a graded
haircut schedule, which will continue to adequately protect the
Eurosystem,” he said, adding that he would give more details at the next
ECB Governing Council meeting on 8 April.
He said a major challenge was reforming the European financial
system.
“Finance must play a constructive role, and not a destructive one,
in our economies,” Trichet said.
Trichet’s comments were echoed by the European Commissioner for
Economic Affairs, Olli Rehn, who said the recovery is “fragile” and “not
self-sustaining.”
Rehn reiterated the European Commission’s position that it is ready
to help debt-stricken countries like Greece, if necessary.
EU leaders are set to meet in Brussels later Thursday, with the
Commission hopeful of an agreement on aid for Greece. But Germany’s
Chancellor Angela Merkel is said to be reluctant to provide aid,
preferring instead a solution led by the International Monetary Fund.
–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com
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