European Central Bank Executive Board member Benoit Coeure said financial markets in the euro area are beginning to function properly again.
“The ECB has been successful in easing market tensions using standard and non-standard tools,” Coeure said in a speech in Luxembourg today. Still, market re-integration “will succeed only if it is supported by continued efforts by governments to bridge fiscal and competitiveness imbalances.”
Since the Frankfurt-based ECB pledged last year to buy government bonds if countries sign up to reform programs, confidence in the single currency has returned. ECB President Mario Draghi said last week that while financial market fragmentation is being repaired, it may take time for the euro- area economy to recover from a three-year debt crisis that’s seen at least five of its 17 countries request bailouts.
“The underlying structural problems which relate to uncertainty about risk, whether in the form of counterparty, credit, liquidity or redenomination risk, need to be solved,” Coeure said.
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