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08 December 2009

ECON committee dialogue with Trichet – EP does not support ECOFIN-adopted conclusions on ESAs


Trichet: ECOFIN ESA decision not first best. However, considering complexity of the topic and sensitivity of different governments, the Swedish Presidency had done a good job. He also said difficult decisions have to be taken with regard to Greece.

Balz (EPP/DE) started by asking whether there is likely to be a shock in the following months. Trichet said it is a possibility. The ECB and member states need to remain alert because the current situation is still one of high unpredictability.

Karas (EPP/AT) raised the issue of the ESAs and asked for the ECB opinion on last week’s ECOFIN-adopted decision. He also wanted to know more about the leverage ratio as regards banking risk control. Mr Trichet said that the ECOFIN decision was not the first best; however, taking into account the complexity of the topic and sensitivity of the different governments, the Swedish Presidency had done a good job. As regard the leverage ratio, he said that the issue is now being discussed by the Basel Committee as well as the FSB. In Trichet’s opinion, the capital requirement weighted by risk should be at the front line of the discussion and as a fall-back the leverage ratio could play an important role, but both issues have to be addressed.
Several MEPs raised the issue of the Greece situation. Trichet said Greece needs to take difficult decisions and that refinancing the state is a problem; the Greek government has to do it. Mr Trichet insisted that his remarks on Greece were equally valid for any member state. He mentioned as an example the Irish Government which also needs to take very difficult decisions to foster growth and recovery.
Some MEPs asked for the ECB position regarding the fact that certain banks have been speculating with the liquidity that the ECB has introduced into the system, yet failed to lend enough money to the market. Trichet said that the ECB has a very clear message for banks. Everything that has been done for them is because of their role in the economy. The ECB has the liquidity to push banks to keep lending. Trichet said that nowadays the problem lies with the demand of credit which has decreased.


© European Parliament


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