Give European Central Bank President Jean-Claude Trichet a vuvuzela.
Having previously confessed ignorance on all things soccer the ECB chief finally appears to have been bitten by the World Cup bug.
He did a Ronaldo-style double step-over when asked who he would cheer for in Sunday’s final between Spain and the Netherlands but admitted he enjoyed Spain’s slick defeat of Germany the previous evening.
“The last match was beautiful I have to say,” Trichet enthused at the bank’s news conference.
The comments were greeted with laughter by the clutch of international journalists in the audience. Realising that he may have sounded a little too happy about Germany’s loss he quickly backpedalled.
“I don’t have any judgment on the result of the match. I said that it was a beautiful match obviously. And the two teams were very beautiful on the field.”
Germans called for Paul the now infamous “the oracle” octopus to be thrown on the BBQ after he predicted the defeat. Mr Trichet could be next in line. Then again there are economists who would argue that Spain needs ECB support at the moment.
Give European Central Bank President Jean-Claude Trichet a vuvuzela.
The European Central Bank is breathing a sigh of relief as it managed to take back 442 billion euros in emergency loans lent to banks a year ago without blowing a hole in money markets.
Banks borrowed modestly from two extra lending operations the ECB offered to sweeten the payment deadline, rolling over just over half the one-year loans, or 243 billion, and letting 199 billion euros flow out of the financial system.
The ECB has been keen to get money markets back on a more normal footing and to avoid banks becoming hooked on central bank money, but was wary of shocking markets with a sudden liquidity shortage.
European banks must pay back almost half a trillion euros to the European Central Bank on July 1 as the ECB’s first-ever one-year loans fall due, potentially putting pressure on banks’ ability to refinance and on money market interest rates.
But the ECB is confident it has put the necessary crash protection in place, with offers of unlimited three-month and six-day funds on the menu next week to make sure banks are not starved for funds.
”We have taken all precautions,” Austrian central bank governor Ewald Nowotny assured journalists on Friday. “We are confident that this will all occur without tensions.”
Top European Central Bank policymaker Juergen Stark took aim at investors and ratings agencies for playing up worries about the future of the euro zone, accusing credit agencies of irresponsible behaviour and saying there was “no alternative” to the single currency.
“Markets are clearly, in the current circumstances, overshooting,” he told a Reuters Insider panel discussion in Frankfurt, saying investors were not taking the region’s economic fundamentals into account when they drove down the euro and drove up the cost of some countries’ debt.
Credit rating agencies compounded the problem by downgrading countries even as they announced ambitious plans to cut costs and debt, he said, pointing darkly to the possibility of “vested interests” at work.
Join us at 9 a.m. GMT on Friday (5 a.m. ET) for a live Reuters debate with ECB board member Jüergen Stark, “Is there a future for the euro?” After a period of turmoil for the European currency, the debate will be a timely reflection on where the currency goes next. Joining Stark will be Thomas Mayer, chief economist at Deutsche Bank, and Volker Wieland, professor of monetary policy at Goethe University in Frankfurt. You can watch the event live here. We’ll post a recording of the event on the same URL shortly after.
They’ll be smashing plates in Athens tonight and it won’t be because it’s Greek national day. Instead, Greek banks and investors will be revelling at the fact the European Central Bank came to the party with a big fat collateral present.
In December and January the ECB said it wouldn’t change its rules on what banks are allowed to swap for ECB loans, even if rating agencies downgraded Greek debt to the point of financial oblivion. However, with markets threatening to push the cradle of civilisation to the brink of ruin, they have decided that it wouldn’t be such a bad idea after all.
ECB President Jean-Claude Trichet said the ECB would extend looser collateral rules, accepting assets rated as low as BBB-, into next year rather than reverting to its previous A- threshold. Greece is currently rated BBB- by two of the three major credit ratings agencies.
The European Central Bank’s normally loquacious policymakers have been struck dumb over the last month.
The ECB’s 22 rate-setters generated just 14 Reuters news stories in February, much lower than January’s total of 24 and the 27 stories I count in December. Even the core Executive Board members have managed only four speeches between the six of them, compared to a flurry of 10 speeches and interviews in the previous two weeks after policymakers returned to work from their end-of-year break.
Even the U.S. Federal Reserve, playing two team members short with just 17 policymakers at the moment, has out-talked the ECB with a rough tally of 26 news stories generated so far this month, a 30 percent increase on January.
Low public debt would usually be a good thing, but it might throw a spanner in the works of Estonia‘s quest to join the euro zone.
The small Baltic country has a stable currency, its deficits and inflation meet European Union rules, and its top policymakers exude confidence the country will adopt the euro next year.
But with government debt below 10 percent of gross domestic product (GDP), Estonia has not needed to issue a benchmark bond — a government bond issued in Estonian kroons for at least 10 years — which it could use to show it has low and stable interest rates, one criteria for euro candidates.
Any doubts about financial markets’ faith in European Central Bank President Jean-Claude Trichet’s cure-all ability should have been put to rest after a euro flurry over Trichet cutting short a visit to Sydney to return to Brussels for a meeting of European Union leaders.
The euro recovered from 8-1/2 month lows against the U.S. dollar after the Reserve Bank of Australia said Trichet would leave anniversary celebrations early, as traders bet that his rush to Brussels meant an increased chance of European leaders agreeing a rescue deal for struggling Greece.
When the ECB later clarified that Trichet had been invited to the Thursday meeting last month and had adjusted his flight plans at the last minute to make a connecting flight, the single currency slipped back 20 ticks to just under $1.37.
“I am very happy to go very far up, far up in the north of Canada,” he told journalists before hopping on a plane en-route to frostbitten Iqaluit, some 300 kilometres south of the Arctic Circle.
“We will have all the right environment to be as cool as possible in judging the situation.”