The euro zone's debt crisis is far from over, European Central Bank Executive Board member Jose Manuel Gonzalez-Paramo said on Friday and called for private sector help to ease Greece's debt problems.
On Thursday European Union leaders promised more money to help Greece stave off looming bankruptcy, provided its parliament enacts an austerity plan finalised in fraught last-minute talks with international lenders.
The bloc's debt turmoil continues to overshadow the rebound in growth in its core economies. Gonzalez-Paramo warned the long-running crisis was still far from over.
"Despite the signs of recovery, the crisis continues, and an end will not be seen soon," he said in a speech at the University of Malaga where he accepted an honorary doctorate.
While saying the euro had been a success, he acknowledged the euro zone was currently at the epicentre of global financial market tensions.
Speaking to journalists before making the speech he said that Greece's debt problems would be helped if the private sector was part of a plan to ease the debt load.
"It's perfectly reasonable to think that if the private sector is involved with a voluntary rollover of Greek debt then the problem will be a lot easier to overcome with benefits for the private and public sides."
He also said there was no clear reason to think that a voluntary rollover of debt maturity would constitute a credit event -- something the ECB remains deeply against for fear it will spark a domino effect of bond writedowns.
STICKS TO 'STRONG VIGILANCE' LINE
In an acknowledgement of the relentless crisis, the ECB extended limit-free lending to the bloc's banks until at least mid-October this month.
Gonzalez-Paramo said there was "unusually high uncertainty" surrounding the euro zone economy, while recent macroeconomic data from the U.S. and China had also surprised on the downside.
Despite the warnings, he bolstered expectations the ECB will raise interest rates to 1.5 percent next month.
"A temporary rise in market risk over one or two days obviously doesn't change the diagnosis of economic policy," he told journalists when asked if recent market volatility could prompt the ECB to change its stance of 'strong vigilance', a phrase it traditionally uses to flag a rate hike.
"Monetary policy has already begun a normalisation process in the euro zone, despite this short-term rates are still accommodative," he said in his speech.
Focusing on Spain, he urged the government to make further changes to a decree on collective wage bargaining, whereby wages are set across entire sectors and linked to inflation, and said Spain's labour reform enacted last year had had little impact.
He welcomed Spanish regions' efforts to publish their accounts on a quarterly basis, but said they should follow the central government by making them available each month to clear doubts over any potential hidden debt piles.
Source: http://in.reuters.com
On Thursday European Union leaders promised more money to help Greece stave off looming bankruptcy, provided its parliament enacts an austerity plan finalised in fraught last-minute talks with international lenders.
The bloc's debt turmoil continues to overshadow the rebound in growth in its core economies. Gonzalez-Paramo warned the long-running crisis was still far from over.
"Despite the signs of recovery, the crisis continues, and an end will not be seen soon," he said in a speech at the University of Malaga where he accepted an honorary doctorate.
While saying the euro had been a success, he acknowledged the euro zone was currently at the epicentre of global financial market tensions.
Speaking to journalists before making the speech he said that Greece's debt problems would be helped if the private sector was part of a plan to ease the debt load.
"It's perfectly reasonable to think that if the private sector is involved with a voluntary rollover of Greek debt then the problem will be a lot easier to overcome with benefits for the private and public sides."
He also said there was no clear reason to think that a voluntary rollover of debt maturity would constitute a credit event -- something the ECB remains deeply against for fear it will spark a domino effect of bond writedowns.
STICKS TO 'STRONG VIGILANCE' LINE
In an acknowledgement of the relentless crisis, the ECB extended limit-free lending to the bloc's banks until at least mid-October this month.
Gonzalez-Paramo said there was "unusually high uncertainty" surrounding the euro zone economy, while recent macroeconomic data from the U.S. and China had also surprised on the downside.
Despite the warnings, he bolstered expectations the ECB will raise interest rates to 1.5 percent next month.
"A temporary rise in market risk over one or two days obviously doesn't change the diagnosis of economic policy," he told journalists when asked if recent market volatility could prompt the ECB to change its stance of 'strong vigilance', a phrase it traditionally uses to flag a rate hike.
"Monetary policy has already begun a normalisation process in the euro zone, despite this short-term rates are still accommodative," he said in his speech.
Focusing on Spain, he urged the government to make further changes to a decree on collective wage bargaining, whereby wages are set across entire sectors and linked to inflation, and said Spain's labour reform enacted last year had had little impact.
He welcomed Spanish regions' efforts to publish their accounts on a quarterly basis, but said they should follow the central government by making them available each month to clear doubts over any potential hidden debt piles.
Source: http://in.reuters.com
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