- Title: EUROZONE-GREECE/ECB-VISCO ECB ready to contain market effects of Greece crisis
- Date: 8th July 2015
- Summary: ROME, ITALY (JULY 8, 2015) (REUTERS) ***WARNING CONTAINS FLASH PHOTOGRAPHY*** ITALIAN FINANCE MINISTER, PIER CARLO PADOAN, ARRIVING IN CAR AND SAYING GOOD MORNING BEFORE ENTERING VENUE FOR ITALIAN BANKING ASSOCIATION (ABI) ASSEMBLY EUROPEAN CENTRAL BANK (ECB) GOVERNING COUNCIL MEMBER AND BANK OF ITALY GOVERNOR, IGNAZIO VISCO, ENTERING BUILDING PADOAN AND VISCO ARRIVING AT
- Embargoed: 23rd July 2015 13:00
- Keywords:
- Location: Italy
- Country: Italy
- Topics: General
- Reuters ID: LVAA8IKFN5JA840Y97X3ZJ5UW83I
- Aspect Ratio: 16:9
- Story Text: The European Central Bank (ECB) is ready to take all measures available to contain undesired financial effects of the Greek debt crisis but it cannot prop up Greek banks much longer, ECB Governing Council member Ignazio Visco said on Wednesday (July 8).
In a speech at an assembly of the Italian Banking Association (ABI) in Rome, Visco, who is governor of the Bank of Italy, said the outcome of negotiations between Athens and its creditors remained "profoundly uncertain" after inconclusive talks in Brussels on Tuesday (July 7).
Visco said the ECB, which has been providing cash-strapped Greek banks with emergency liquidity, could not continue to support them for long without progress on a cash-for-reforms deal at the political level.
"The Governing Council has acted with responsibility and prudence maintaining the support of liquidity to Greek banks. But the situation, objectively, is difficult and, in order to maintain support, it is necessary that there is a clear prospect of a political agreement on a programme that cancels the risk of insolvency of the Greek debt."
Visco said the ECB's bond-buying programme known as quantitative easing (QE) had not so far been significantly weakened by the Greek crisis and the bank was "determined to "fully carry out" the programme to increase inflation.
He said that any unwanted restrictions in monetary conditions "will be strongly countered".
"The Governing Council is closely watching developments today and these days, on financial markets and their implications for monetary conditions and price stability in the eurozone; it is ready to use all instruments at its disposal," Visco said.
Without mentioning the risk of Greece leaving the eurozone which many analysts now consider probable, Visco said the direct effects of the crisis on the eurozone were likely to be modest.
"The direct effects of the Greek crisis, through commercial and financial ties, are likely to be modest for Italy and the eurozone even in the worst case scenarios. However the crisis could have more serious repercussions if it rekindles the fear among international investors that the eurozone is not irreversible. In this case coordinated action by national and European authorities (to counter market market tensions) will be indispensable," he said.
Addressing the assembly, Italy's Finance Minister Pier Carlo Padoan reminded EU leaders to keep their focus on Europe.
"The real dilemma is not whether it's yes or no to austerity, the real dilemma is how to concretely achieve the objective of growth and jobs in Europe. There are no shortcuts to growth, what we need are national and European programmes, the completion of the internal market, stimuli and incentives for investing and the creation of physical and intangible capital for revitalization," said Padoan.
According to the bloc's banking regulator, markets are coping well with uncertainty over Greece's future in the eurozone, with little sign so far of contagion that would undermine wider European Union financial stability.
Eurozone members have given Greece until the end of the week to come up with a proposal for sweeping reforms in return for loans that will keep the country from crashing out of the euro. - Copyright Holder: REUTERS
- Copyright Notice: (c) Copyright Thomson Reuters 2015. Open For Restrictions - http://about.reuters.com/fulllegal.asp
- Usage Terms/Restrictions: None