Financial Regulatory Forum

    FRANKFURT, Nov 15 (Reuters) – Missing the right moment for the exit from extraordinary policy steps to combat the financial crisis carries the risk of creating new turbulence, European Central Bank Governing Council member Axel Weber said on Monday.
   In the text of a speech to be delivered at Frankfurt’s Euro Finance Week, Weber said fiscal, monetary and political authorities had to make sure they did not wait too long to unwind support, as well as the International Monetary Fund.
   The financial situation had recently stabilised but policymakers still had to be vigilant.
   “Stabilisation does not mean sustainable recovery, neither for financial markets nor for growth. Therefore we have to remain vigilant and keep an eye on all the risks,” said Weber, who heads the German Bundesbank.
   “Secondly, at a conceptual level one should have started preparations for an exit from the measures introduced because of the crisis. If the right moment for the exit is missed, there is a danger that new turbulences will be created.”
   Weber said policymakers still had to press ahead with regulatory reforms, which should be timely but not over-hasty and would provide an essential contribution to sustainable growth and financial stability.
   Weber urged German banks to make use of aid to short up their capital positions but said there had to be a “painful” process of restructuring and  consolidation in the German banking sector.
   The Bundesbank did not see a credit crunch as part of its baseline scenario, Weber said, but he noted that a revival of securitisation for corporate credit would help improve credit supply. (Reporting by Krista Hughes, editing by Mike Peacock) ((krista.hughes@reuters.com; +49 69 7565 1313; Reuters Messaging: krista.hughes.reuters.com@reuters.net))
 Keywords: ECB/WEBER 
  
Monday, 16 November 2009 08:50:00RTRS [nLAG005918] {C}ENDS