FRANKFURT (MNI) – Cutting the negative feedback loop between banks
and sovereigns remains key to solving the Eurozone crisis, European
Central Bank Governing Council member Christian Noyer said in an
interview released by German newspaper Handelsblatt Monday.
“We must solve the root problem. The connection between banks and
governments must be severed,” said Noyer, who also heads the French
central bank.
Noyer said a successful common monetary policy requires a “true
harmonization of the (EMU) banking system.”
The paper said Noyer showed understanding for Germany’s rejection
of common deposit guarantees, but he suggested a Eurozone back-up fund
could be put in place that would act as a guarantor of national deposit
guarantees.
“We must ensure that there is an integrated system with a common
level of security,” he said.
Noyer rejected calls from U.S. economists for higher inflation
targets, telling the paper “the impact on growth would be negative.”
Noyer said European politicians must “prove to the world, that they
want a political Europe that heads in the direction of a federal
system.”
— Frankfurt bureau: +49 69 720 142; email: ccermak@marketnews.com —
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