Brussels, 12/09/2001 (Agence Europe) - At a joint press conference they held on Wednesday to assess the repercussions for the European economy that the attacks that took place in the United States could have, the Belgian Finance Minister (and President of the Eurogroup), Didiers Reynders, and Commissioner Pedro Solbes together stated that the financial and monetary markets, as well as the financial settlement and transaction systems were currently functioning "without major problems", even though they did recognise that, in the longer term, these events strongly jeopardised the hopes of a recovery of the American economy (and therefore risked affecting European growth that was supposed to recover towards the end of the year). They therefore wanted to send out a message of confidence to the markets and economic operators.
Having addressed a message of condolence and deep sympathy to the American people for the victims of the terrorist acts, Mr. Reynders declared, on behalf of EcoFin Ministers, the European Commission and the European Central Bank: "we are prepared, in close collaboration with the American authorities, to provide any support that may be necessary, and I may confirm that all measures will be taken to ensure the adequate functioning of markets and the stability of the financial system. The EU's central banks will continue their action to provide the liquidity necessary to enable the payment system to function correctly". In agreement with the contents of the discussions that Member States had, Wednesday morning, within the Economic and Financial Committee, Commissioner Pedro Solbes considered that, for now, the repercussions in Europe of the American economic evolution (vulnerability of the dollar, closure of the stock markets, collapse of the values of airline and insurance companies, and steep rise in the price of oil and gold) should be "limited".
Mr. Solbes conceded that Tuesday's events "will have an effect at least on consumption in the United States", and, that given the interdependence between the American economy and the economy in Europe, it was likely that the current hypotheses for growth (close to 2%) would have to be downwardly reviewed. Furthermore, he was not all that bothered by the spectacular increase in the price of oil (in reaction to expectation of American reprisals). "According to the many contacts that we have had between members of the EcoFin Council, central banks and national and international prudential control authorities, we do not see any major problem in Europe: markets are open, liquidity is present. The only difficulty, but that is of a technical order, comes from the fact of the lack of quotes for American stocks", Mr. Reynders summarised for his part, adding that the results of these contacts had shown "that it is possible to work calmly and pursue economic activity in the coming days". The Eurogroup will return to these issues at its meeting of Friday 21 September, before the informal EcoFin Council of Liege.
Duisenberg-EP exchange of views largely devoted to attacks in United States
- ECB injects liquid assets
"A am wholeheartedly behind the citizens of the United States and notably the friends, families of those who were the victims of this cruel attack", declared the President of the ECB, Wim Duiddenberg, in his exchange of views, on Wednesday, with the European Parliament's Economic and Monetary Committee, which was largely devoted to the market consequences of the terrorist attacks that struck New York and Washington. "I would like to stress that the ECB and other national central banks are ready to do all they can to support the markets so that they function correctly should the need arise", Duisenberg stated, before adding that the ECB was in close contact with the world's other large central banks, including the American Federal Reserve. Duisenberg did not want to speculate on the economic consequences of the events in the USA, simply declaring that there may be some "in the long-term", but that it was premature to judge. In addition, Mr. Duisenberg said that he had just been informed that the ECB had decided, Wednesday morning, to inject liquid assets "to ensure the stability of the financial system" thanks to the opening, for banks, of a rapid re-financing counter at a set rate if 4.25%, without precise amount (and for a duration of a day). "The ECB will continue to observe the liquid asset situation in the course of the day and over the next few days and be prepared to take further measures", the bank stipulates in a press release. The ECB has allocated 69.281 billion euro, these credits having benefited 65 banks. These operations for rapid calls for tenders are part of the "fine tuning" tools at Eurosystem's disposal to manage the situation of liquid assets on the market and pilot interest rates, notably to dampen the effect of unforeseen liquid assets fluctuations on the latter. In addition, the Governing Council of the ECB should be discussing the international financial situation on Thursday on the occasion of its twice-monthly meetings.
Answering MEPs, like Karl von Wogau (member of the CDU), Mr. Duisenberg considered that it was "important, foremost, to maintain consumer and producer confidence, and that the Eurosystem is able to take up the challenge of price stability". Robert Gobbels (Luxembourg Socialist) and Alain Lipietz (French Green) regretted that Duisenberg should not have chosen "to strike hard" (according to the words of Mr. Goebbels) to restore market confidence. The President of the ECB replied that too rapid a reaction would not have been well received by the public.
Finally, continuing his regular dialogue with Parliament on the ECB's monetary policy, Mr. Duisenberg predicted that inflation in the euro zone should fall below 2% in the near future, except for exceptional economic circumstances. Thus, he is counting on inflation of a little under 2% in 2002 and 2003 and considers that European rates, recently reduced by a quarter of a point, "are at a level compatible with maintaining price stability". The President of the ECB also predicts a moderate recovery in 2002, but an acceleration in recovery in 2003, as, he says, the factors of a return to growth are possibly already at work. Regarding the rate of unemployment, he said he expected a level of less than 8% in 2003 in the euro zone, the fall continuing in 2002 and accelerating in 2003.