BRUSSELS (MNI) – European Central Bank governing council member Luc
Coene said Monday that Eurozone finance ministers’ decision to
pre-authorise E100 billion in aid for Spain had brought the situation
under control and that he did not see the use of European Stability
Mechanism aid as grounds for a credit event.
“What is important is that we have a mechanism in place that will
enable us to isolate this Spanish problem because it was seen as a major
risk for the Eurozone,” said Coene. “This risk is now being limited and
it is under control because we have the necessary resources to do this,”
he said.
Eurozone finance minister have taken the decision in principle and
it was now just a question of resolving some practical details he said.
“The fact that ESM debt is senior is not in itself enough to have a
credit event,” the ECB governing council member said.
Spanish bond prices fell Monday afternoon following European
Commission clarifications about the seniority of ESM loans, which rank
above all creditor accept the IMF.
Asked whether the aid for Spain would clear the way for the
European Central bank to intervene in Spanish sovereign bond markets,
Coene said that the two issues had “nothing to do with one another. The
SMP was a programme that was devised in order to improve the
effectiveness of monetary policies on the market, so we would have to
see whether there are some issues there. There is no connection between
the two things.”
Coene also presented the National Bank of Belgium’s Spring economic
forecast, in which the Belgian central bank forecast that Belgium would
hit is EU fiscal deficit target of 2.8% of GDP this year.
Belgium’s fiscal deficit would likely go back up again in 2013 to
reach 3.1% of GDP, the central bank forecast.
The National Bank of Belgium revised upwards its GDP growth
forecast for 2012 by 0.1 percentage point to 0.6% of GDP, because of a
better-than-forecast GDP growth of 0.3% in Q1 2012.
The bank said it saw unemployment in Belgium rising to 7.5% in 2012
and 7.7% in 2013, from 7.2% in 2011.
HICP inflation would hit 2.6% in 2012 but fall to 1.5% in 2013, the
central bank predicted.
–Brussels newsroom: +324-9522-8374; pkoh@marketnews.com
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