Financial Regulatory Forum

ECB’s Trichet-hard to judge financial stability

November 18, 2009

Jean-Claude Trichet, President of the European Central Bank (ECB) REUTERS/Johannes Eisele (GERMANY BUSINESS)    FRANKFURT, Nov 18 (Reuters) – Assessing the stability of Europe’s financial institutions is “particularly complex” at the moment, European Central Bank President Jean-Claude Trichet said on Wednesday.
   “There is a need to disentangle what might be called ‘self-sustainable stabilisation’ from that which is purely due to the unprecedented programmes of official support for the financial system,” Trichet said in a speech to a conference of the CEIOPS committee of European insurance supervisors.
   The speech made no mention of current ECB interest rate policy.
   European insurers have reported improved results in recent months, but there are reasons to be cautious about the durability of insurers’ recovery in profitability, Trichet said.
   The industry faces few solvency concerns but there was no room for complacency in the current environment and insurers must take care to maintain sufficient capital buffers, he said.
   The ECB left rates unchanged at a record low of 1 percent earlier this month and is not expected to start tightening credit before the third quarter next year. [ID:nLAG005913]
   Low interest rates hurt insurers by trimming the yield on government and other bonds, which are the main source of investment income for the industry. (Editing by Andy Bruce) ((Reporting by Jonathan Gould and Marc Jones; Reuters Messaging: jonathan.gould.reuters.com@reuters.net; +49 69 7565 1242))
 Keywords: ECB/TRICHET 
  
Wednesday, 18 November 2009 08:46:58RTRS [nWLA8469  ] {C}ENDS

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