FRANKFURT: The euro zone economy will not operate at its full potential again for many years, but will emerge stronger, European Central Bank Executive Board member Benoit Coeure said in an interview published on Saturday.
"I'm optimistic, but we need to be ready for a long adjustment period that can take many years," Coeure was quoted as saying in the interview with the Slovenian newspaper Delo.
"I'm convinced that the euro area will also emerge from this episode better prepared to face future crises."
The ECB Governing Council met in Slovenia on Thursday for one of the two meetings the bank holds each year away from its Frankfurt headquarters.
It decided to leave interest rates at a record low of 0.75 percent, pointing to a very gradual recovery.
Like ECB President Mario Draghi on Thursday, Coeure said the ECB was ready to buy bonds of debt-stricken euro zone states to help lower their borrowing costs if all conditions were met, which included the countries signing up to a rescue package.
"It is now up to the governments and the Eurogroup to act. We at the ECB are ready," Coeure said. If governments took all the necessary measures, Coeure said he didn't see the risk of a country leaving the euro zone.
Asked whether Slovenia should request outside help to cope with a recession and state-owned banks burdened with bad loans, Coeure said this was up to each country to decide.
He said the ECB supported government plans to set up a new company to take over bad loans from state-owned banks, as long as certain conditions were met.
He called for a conservative valuation of bad loans, money to be set aside by the government and a recapitalisation of banks with infusions of hard currency rather than with government bonds.
"It is illusory to think that losses on bad loans can be absorbed without budgetary costs.
The government must therefore provide capital for this new company that will absorb losses," Coeure said. The IMF has urged Slovenia to privatise the state-owned lenders.
indiatimes.com
"I'm optimistic, but we need to be ready for a long adjustment period that can take many years," Coeure was quoted as saying in the interview with the Slovenian newspaper Delo.
"I'm convinced that the euro area will also emerge from this episode better prepared to face future crises."
The ECB Governing Council met in Slovenia on Thursday for one of the two meetings the bank holds each year away from its Frankfurt headquarters.
It decided to leave interest rates at a record low of 0.75 percent, pointing to a very gradual recovery.
Like ECB President Mario Draghi on Thursday, Coeure said the ECB was ready to buy bonds of debt-stricken euro zone states to help lower their borrowing costs if all conditions were met, which included the countries signing up to a rescue package.
"It is now up to the governments and the Eurogroup to act. We at the ECB are ready," Coeure said. If governments took all the necessary measures, Coeure said he didn't see the risk of a country leaving the euro zone.
Asked whether Slovenia should request outside help to cope with a recession and state-owned banks burdened with bad loans, Coeure said this was up to each country to decide.
He said the ECB supported government plans to set up a new company to take over bad loans from state-owned banks, as long as certain conditions were met.
He called for a conservative valuation of bad loans, money to be set aside by the government and a recapitalisation of banks with infusions of hard currency rather than with government bonds.
"It is illusory to think that losses on bad loans can be absorbed without budgetary costs.
The government must therefore provide capital for this new company that will absorb losses," Coeure said. The IMF has urged Slovenia to privatise the state-owned lenders.
indiatimes.com
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