His comments came during a news conference after the widely anticipated announcement that the bank had kept its benchmark refinancing rate untouched at a record low of 1 per cent, saying recent data don't support "excessively pessimistic" views.
Trichet dismissed suggestions that the outcome could add to Europe's ongoing debt crisis by revealing new problems.
He said the ECB has been "convinced since the very beginning that transparency has its virtue, and that it is good that the market … can see exactly what is the result of those tests.
"We think that it is confidence-building," he told reporters
The test are aimed at easing market fears about the exposure of banks to the risk countries such as Greece, Portugal or Spain will default, and are designed to show how banks would cope if circumstances worsen.
The tests will cover 91 banks in Europe, which represent 65 per cent of the European banking sector, and will test how the banks would perform if economic growth falls three per cent below official forecasts.
Results are to be published July 23. French Finance Minister Christine Lagarde has predicted they will show European banks are "solid and healthy."
Rigour of tests questioned
Vancouver-based Citizens Bank dismissed the usefulness of the stress tests.
"Given the real possibility exists that Greece will most certainly default on its debts, many in the markets believe that these tests are not rigorous enough," it said in a commentary.
"At the risk of sounding cynical, the results of these bank stress tests are designed to calm investors' fears; is it reasonable to believe that the report cards will give a failing grade to the entire European financial system?"
No comments:
Post a Comment