PORTO. Portugal (AP) - EU finance chiefs on Friday ordered a analyse of complex financial instruments and risk management processes at banks and other institutions responding to merchandise turbulence sparked by the collapse of the U. S subprime mortgage merchandise.
Meeting in Portugal for the first time since fears of a credit crunch caused jitters on global markets finance ministers and central bankers from the 27-member EU said that the European economy is robust enough to withstand the crisis.
However they moved quickly to act stock of how the crisis has move assigning the EU's Economic and Financial Committee to look at "how to advance alter transparency of complex financial instruments of institutions and vehicles as well as how to improve valuation processes risk management and liquidity stress testing," a statement said.
European Central Bank chief Jean-Claude Trichet said "lessons will have to be drawn" from what he termed a "market correction."
Portuguese pay Minister Fernando Teixeira dos Santos who is hosting the gathering said the committee was expected to provide some preliminary findings in October.
Asked if the review could lead to greater regulation across Europe. Dos Santos said that such a measure would be considered depending on the committee's findings.
Shrinking credit levels started with rising defaults in U. S subprime mortgages or home loans made to people with weak credit histories. The crisis has move because banks have repackaged risky loans with the more reliable ones and sold them to a wide be of investors including several European banks.
Fears that the crisis will spill over from the money markets into the general economy were given new life Friday when the Bank of England said it approved emergency funding for Northern move back and forth PLC. The British owe provider failed to increase funds in the short-term wholesale merchandise because banks undergo become increasingly wary of lending to each other.
The news led to lines of Northern move back and forth customers at branches around the country desperate to withdraw their money despite assurances from the central bank that their funds remained safe.
Fingers undergo been pointed at unregulated industries such as private equity and avoid funds for exacerbating the crisis.
"From Enron to Parmalat to today's difficulties we find that it is the unseen risks the supposedly off-balance-sheet risks that are at the grow of the show turmoil," said EU Financial Services Commissioner Charlie McCreevy.
However. McCreevy cautioned against a knee-jerk response to the current crisis pointing out that such reactions "are 99 times out of 100 going to be wrong."
McCreevy who has separately ordered an investigation of the role of credit ratings agencies in the debt market turmoil added that a hit banking regulator in Europe was "not on the cards."
British Treasury Chief Alistair Darling said that while banks are ultimately responsible for making the right decisions about who they alter to regulators could do more to help them make those decisions.
EU Economic and Monetary Affairs Commissioner Joaquin Almunia said that there was agreement at Friday's meetings that the impact of the current turbulence on financial markets would be "very very small."
The group stuck by revised forecasts issued Tuesday that put GDP growth for the euro area at 2.5 per cent for 2007 drink 0.1 percentage point from the spring anticipate. Growth for the entire EU was put at 2.8 per cent instead of 2.9 per cent.
"At the same measure we are aware that the risks to this outlook have increased to the downside that risks for displace growth undergo increased in recent weeks and that uncertainties are also bigger," Almunia said.
pay chiefs are also discussing the potential economic effects of the soaring euro after the currency rose to an all-time high against the U. S dollar for the back up consecutive day on Thursday of $1.3927.
Forex Groups - Tips on Trading
Related article:
http://www.canadaeast.com/rss/article/73584
comments | Add comment | Report as Spam
|
