VIENNA, March 24 European Central Bank
policymaker Ewald Nowotny does not expect euro zone member
Cyprus's economic woes to spread, he told a newspaper.
He said Cyprus was a "special case" due to its outsized
financial sector fuelled by foreign investors, in an interview
with Austrian paper Oesterreich conducted on Tuesday and
published on Sunday.
"This system is certainly no longer able to continue," said
Nowotny, the head of Austria's central bank.
Asked how dangerous the Cyprus crisis was for Europe's
financial markets as the country scrambles to secure a bailout
deal with international lenders, he said that Cyprus accounted
for only 0.2 percent of the euro zone's economic output.
"We see clear signs of improvement in Spain, Portugal and
Ireland. I see no massive economic problems in Italy as well, so
I do not believe that it will come to contagion," he said.
Cypriot President Nicos Anastasiades was due in Brussels on
Sunday to seek an 11th-hour reprieve from financial meltdown,
with a bailout from the European Union and the island's place in
Europe's single currency bloc hanging in the balance.
Nowotny ruled out the idea that officials could tax deposits
in Austria, a plan being considered in Cyprus. "Austrian savers'
money is absolutely safe," he said.
Asked when savers could expect higher interest rates, he
said: "When economic developments improve, but we expect the
rate of inflation to fall in 2013 so real returns will improve."
Nowotny said the Austrian economy would expand by around 1
percent this year, well above the average in the euro area, then
growth would accelerate to 1.7-1.8 percent in 2014.
That is in line with the latest forecasts last week from
Austria's main economic think-tanks.