Update: ECB Praet: Must Oppose Disintegrative Market Forces
MILAN (MNI) – Recent tensions that compromise the integration of
financial markets in the Eurozone must be countered, European Central
Bank Executive Board member Peter Praet said on Friday.
“We have to lead against the forces which are disintegration
forces,” Praet told The International Capital Market Association’s
Annual General Meeting and Conference. “At this juncture, it is very
important to re-emphasize the benefits of financial market integration
in Europe and the world.”
“A united Europe, especially one that has decided to have a single
currency, needs united financial markets as well to operate as a single
entity,” he stressed.
Praet said that “a highly integrated financial system” is key for a
properly functioning single monetary policy, since “integrated markets
ensure a smooth and balanced transmission of monetary policy throughout
the euro area.”
Financial market integration has been thrown into reverse as a
result of the crisis. Credit conditions diverge widely as investors
demand huge risk premiums for holding debt issued by the governments and
banks of peripheral countries, even as yields in Germany hit record
Banks also have cut cross-border businesses after taking heavy
losses on local acquisitions and on their holdings of peripheral bonds.
The ECB has recently stressed the importance of financial market
integration for the health of the common currency union. “It is during
times of crisis that we should not allow our commitment to the cause of
furthering market integration to fade,” ECB President Draghi said
earlier this month.
–Frankfurt newsroom +49 69 72 01 42; e-mail: email@example.com
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