The President of the European Central Bank (ECB), Christine Lagarde, reiterated this Monday in Brussels, before the European Parliament (EP), that the institution is ready to intervene, “if necessary”, to safeguard the financial stability of the eurozone in light of recent “tensions”.
In a debate, the so-called “economic dialogue”, with the Parliament’s Committee on Economic and Monetary Affairs, and in the part of his speech devoted to the latest developments in the financial market, shocked by the collapse of the US bank Silicon Valley Bank (SVB) and the sharp fall of the Credit Suisse stock market, Lagarde welcomed “the swift action and decisions of the Swiss authorities” regarding the Swiss bank.
“These actions were essential to restore orderly market conditions and safeguard financial stability,” he noted, ensuring that the ECB “continues to closely monitor market developments” and is ready to “respond when necessary to ensure price stability and financial maintain stability in the Eurozone”. .
To re-ensure that “the euro zone banking sector is resilient, with strong capital and liquidity positions”, the French official emphasized that “in any case, the ECB’s policy toolkit is fully equipped to provide liquidity support to the financial system of the Eurozone, if necessary, and to maintain the smooth transmission of monetary policy”.
“In terms of financial stability, we have all the tools that will be needed, that will eventually be needed, to deal with the tensions”reinforced, adding, already at the questioning phase of the Members of the European Parliament, that if these instruments should prove to be insufficient by chance, the ECB would be able to “make the necessary adjustments or recalibrations to cope with any liquidity risk offer” that could be seen on the horizon.
Switzerland’s President Alain Berset announced on Sunday that it will buy Swiss banking group UBS Credit Suisse as the best way to “restore confidence”.
Credit Suisse endured a week of turmoil, losing more than 25% of its market capitalization. On Thursday, it became the first major global bank to receive emergency aid since the 2008 financial crisis.
The negotiations that led to this operation involved the Swiss government and the central bank in addition to the two banks.
Source: DN
