Updated Tuesday, January 12, 2010 9:58 am TWN, AFP
World economy returning to normal: bankers
BASEL, Switzerland -- Emerging economies are driving a global economic recovery, the head of the ECB said Monday after central bankers concluded that the world economy was returning to normality.
“At a global level ... there is a confirmation of the progressive normalization of the economy,” European Central Bank (ECB) president Jean-Claude Trichet said on behalf of the central bank chiefs.
During their first quarterly meeting of the year at the Bank for International Settlements (BIS), the central bankers confirmed that a global economic recovery was underway.
“We are in the recovery mode, that is something that is very much due to the emerging economies,” Trichet said.
Those economies had “demonstrated resilience,” and were “very, very clearly in a more dynamic mode now,” the ECB chief told reporters.
The assessment marked an upbeat beginning to 2010, two months after the influential group of central bankers said the world had pulled out of economic freefall but still faced risks that could knock confidence.
However, Trichet warned that commercial banks must ensure that they clean up their balance sheets in the wake of the financial crisis and credit crunch that precipitated the worst recession since the Great Depression of the 1930s.
“We are telling our banks that they have to do themselves, everything to reinforce their balance sheet by all appropriate means,” he said.
That included “putting aside their own profit” and being “moderate in remuneration behaviour,” he added, amid an ongoing debate over pay and bonuses at banks that are feared as being so large as to present a risk to the entire financial system and economy if they run into trouble.
Trichet also added a note of caution about the risk of inflation, especially in the emerging economies leading the recovery.
World economy returning to normal: bankers
BASEL, Switzerland -- Emerging economies are driving a global economic recovery, the head of the ECB said Monday after central bankers concluded that the world economy was returning to normality.
“At a global level ... there is a confirmation of the progressive normalization of the economy,” European Central Bank (ECB) president Jean-Claude Trichet said on behalf of the central bank chiefs.
During their first quarterly meeting of the year at the Bank for International Settlements (BIS), the central bankers confirmed that a global economic recovery was underway.
“We are in the recovery mode, that is something that is very much due to the emerging economies,” Trichet said.
Those economies had “demonstrated resilience,” and were “very, very clearly in a more dynamic mode now,” the ECB chief told reporters.
The assessment marked an upbeat beginning to 2010, two months after the influential group of central bankers said the world had pulled out of economic freefall but still faced risks that could knock confidence.
However, Trichet warned that commercial banks must ensure that they clean up their balance sheets in the wake of the financial crisis and credit crunch that precipitated the worst recession since the Great Depression of the 1930s.
“We are telling our banks that they have to do themselves, everything to reinforce their balance sheet by all appropriate means,” he said.
That included “putting aside their own profit” and being “moderate in remuneration behaviour,” he added, amid an ongoing debate over pay and bonuses at banks that are feared as being so large as to present a risk to the entire financial system and economy if they run into trouble.
Trichet also added a note of caution about the risk of inflation, especially in the emerging economies leading the recovery.