BRUSSELS (MNI) – Imposing ‘haircuts’ on bondholders would send the
wrong message to the markets, European Central Bank Governor
Jean-Claude Trichet said at a meeting here of the European Parliament’s
Committee on Economic and Monetary Affairs.
At the same hearing, Trichet also told Greece and Ireland to ‘apply
the programme’ and stressed that such ‘haircuts’ are not part of the
adjustment programmes presently being implemented by Greece and
Ireland.
“The message is very simple: apply the programme,” he said, adding
that the programme “does not comprehend the concept you have mentioned.”
“Modern markets are made of investors that are long and investors
that are short. The investors that are long – private sector investors –
are losing money when you practise this haircut you have mentioned.
Those investors that are short are making it. This is also something
that one must have in mind when reflecting on this very important
issue.”
On haircuts in general, Trichet said that the recovery plans had be
implemented in the best fashion possible and that it is “very, very
important, in my opinion, not to confuse things. ”
Trichet also told deputies that the central bank was following
trends in M3 aggregates “particularly closely” and noted that it was
growing less than GDP.
Asked by a member of the committee whether the central bank would
raise interest rates if inflation was confirmed in the real economy, he
said.
Trichet also insisted that the roles of ECB president and head
of the European Systemic Risk Board had to be kept “strictly separate”
as they did not “mingle at all”.
–London newsroom: 0044-207-634-1624: email: ukeditorial@marketnews.com
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