Bloomberg News

Europe Must Use Calm on Markets to Do Reforms, Asmussen Says

March 24, 2012

European Central Bank council member Joerg Asmussen said the region’s governments must make use of the calm period in the markets created by the central bank’s three-year loans.

“All countries of the euro zone have to do their homework,” Asmussen told reporters in Saariselkae, Finland, 1,100 kilometers (684 miles) north of Helsinki. They have to “do structural reforms, create jobs. This is true for all countries.”

The Frankfurt-based ECB has lent banks 1 trillion euros ($1.3 trillion) for three years in two operations since December, easing pressure on bond yields of peripheral countries. The bank kept its benchmark interest rate at a record-low of 1 percent on March 8. ECB’s actions buy time for governments to balance budgets, reform economies and create jobs to boost economic growth.

The ECB “has done its part, the governments must do theirs,” Erkki Liikanen, who heads the Bank of Finland and sits on the ECB’s governing council, said in an interview on March 15. The 17-nation euro economy will contract 0.1 percent this year and grow 1.1 percent in 2013, the central bank forecast on March 8.

“Even if this crisis is a little bit calmer, we still think it is needed to increase the European firewalls,” Asmussen said.

He said he expects discussion on the firewalls today as well as at the euro-area finance ministers’ meeting in Copenhagen next week. “We need for all partners to be involved,” Asmussen said.

Olli Rehn, European commissioner for economic and monetary affairs, said there is no room for complacency or easing the crisis-fighting stance. He said he is certain European leaders will make decisions that increase confidence.

To contact the reporter on this story: Kati Pohjanpalo in Helsinki at kpohjanpalo@bloomberg.net

To contact the editor responsible for this story: Tasneem Brogger at tbrogger@bloomberg.net


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