PARIS (MNI) – The European Central Bank will continue to provide
liquidity to the Eurozone economy and banks must do their part by lending
to business, ECB Governing Council member Christian Noyer said Monday.

The ECB will continue its “determined action to counter abnormal
market trends and to ensure the best transmission possible of monetary
policy,” the governor of the Bank of France said in his New Year’s
greeting to the French financial establishment.

“Our decision to loosen collateral eligibility criteria for
refinancing operations also demonstrates our firm resolution to support
financing of the economy,” he said.

Stressing the importance of financing for the economy
this year, Noyer called on banks to be generous in lending to business,
especially small businesses.

“A too cautious attitude of banks in the provision of credit would
only lead to a deterioration of the economic situation and thus to a
rise in risks — which is exactly what you aim to avoid,” he said.

Noyer reiterated that French banks are “well armed” to meet the
new core Tier 1 capital targets by the middle of this year.

Speaking to insurers, Noyer urged them to maintain diversified
investment portfolios, “including sovereign debt of good quality.”

The New Year promises to be “full of challenges,” and the recent
downgrade of the credit ratings of many EMU members is “clearly an
additional challenge,” he said. “However, the strategy of member states
appears to me to be the right one.”

Noyer called on the financial community to continue to support
Paris as a financial center. Whatever comes out of negotiations between
NYSE Euronext and Deutsche Boerse, the equities markets should remain
piloted from Paris, he said.

“One must hope that an eventual financial transactions tax will not
affect” the excellent standing of Paris as a financial center, Noyer
added, stressing that any such tax should “clearly” be European in
nature and that the project proposed by the European Commission raises
a number of problems that merit closer study.

–Paris newsroom +331 4271 5540; email: ssandelius@marketnews.com

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