LONDON (MNI) – There are some tentative signs that the success of
the European Central Bank’s 3-year long-term repo operation is starting
to feed through into the real economy, the central bank’s director
general of market operations Francesco Papadia said here today.
Speaking at AFME’s liquidity conference, Papadia said that in terms
of solving the euro zone’s bank liquidity problem, the ECB could declare
“mission accomplished”.
With time the success of this would feed through to the real
economy, he said, and he said he detected “tentative signs that this was
already starting to happen.
Papadia gave an upbeat assessment of the latest developments in the
euro zone, noting that he was “much more reassured” on the average
weighted progress of states towards fiscal consolidation and
growth-enhancing policies than he was 3 months ago.
Papadia also welcomed the agreement of EU leaders Dec 9 on the new
‘fiscal compact’. saying that this marked a ‘fundamental step towards
better governance in the euro area”.
In other comments, Papadia rejected the metaphor of a ‘bazooka’ to
describe what was needed to protect the euro zone from market contagion,
saying that this conjured up rambo-like notions of the euro zone
“zapping away its problems”.
Papadia nevertheless said he recognised the need of a “firewall” in
order to bridge the gap between the progress that states were indeed
making on reforms and fiscal consolidation and the markets perceiving
what had been achieved.
–London newsroom: 0044-207-634-1624: email: dthomas@marketnews.com
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