Brussels, 01/10/2008 (Agence Europe) - The crisis may be put down to past excesses, but the impact of current adjustments will probably last for a long time yet. “I believe that we still have many months to go before we can say that all our problems have been resolved,” said Eurogroup President Jean-Claude Juncker on Wednesday 10 October. Juncker expects growth of “around 1%” in the euro area in 2009. In an interview with French radio station EUROPE 1, he said that the four European members of the G8 (France, Germany, Italy and the United Kingdom) along with Jose Manuel Barroso, Jean-Claude Trichet and himself would meet in Paris on Saturday 4 October to consider a European response to the crisis. They will, in particular, seek to settle their position ahead of the G8 meeting in November or December which will be devoted to the financial crisis, said Juncker, the Luxemburg Prime Minister and Finance Minister. While welcoming recent government intervention to “prevent the European banking system from falling into crisis”, he is nonetheless looking for more effective anti-crisis mechanisms. “We have to make European responses, safety nets and mechanisms for getting out of this crisis more systematic,” he said, while urging Europeans to be confident. “I don't think that any government would allow a major European bank to go bankrupt, because this would unleash a wave that would bring great loss of employment,” he said.
In providing markets with liquidity, the European Central bank (ECB) had fulfilled its role, but this kind of intervention was different from monetary policy. Despite darkening prospects for growth and a slight decrease in inflation, down to 3.6% in September, from 3.8% in August and 4% in July and June, the primary target for the ECB is to combat price rises. It is unlikely, then, that the Governing Council will, on Thursday 2 October, change interest rates in the euro area.
The Commission's contribution consists in applying the rules on state aid “with flexibility and responsibility” to ensure the viability and future stability of the companies affected by injections of public funding over the last few days, José Manuel Barroso said on Wednesday. He told press he would do his utmost to re-establish citizens and market players' confidence, while acknowledging, of course, that the situation was “very serious”. However, “the European financial system has the ability to respond (to the crisis). We can have confidence in it,” he stated, urging a “structured” European response. “A clear perspective is fundamental for markets to calm and to restore full confidence,” he said, going on, “We need very articulated answers by European governments, together with EU institutions and the regulators and supervisors in Europe”. To achieve this, the European response, he said, should include: - further strengthening of the supervision structures at European level (see related article); - refinement of the rules (especially accounting) on the evaluation of complex assets; - improvement in the consistency of deposit guarantee schemes (with possibly the creation of a system of joint mechanism to protect individuals' deposits); - greater transparency in executive salaries and bonuses (as already set out in a Commission recommendation of October 2004); - and continued structural reforms. (A.B./transl.rt)