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UPDATE 1-IMF chief says welcomes Europe banking deal
December 13, 2012 / 7:10 PM / 5 years ago

UPDATE 1-IMF chief says welcomes Europe banking deal

* Lagarde says progress made on banking union

* IMF also ups Chile 2012 growth f‘cast to 5.5 pct

SANTIAGO, Dec 13 (Reuters) - The head of the International Monetary Fund on Thursday welcomed a landmark deal that gives the European Central Bank new powers to supervise banks, saying progress had been made in the aim of reinforcing the region’s banking union pillar.

The European governments’ deal boosted confidence in the single currency bloc as it enters the fourth year of its debt crisis.

“On the European banking union ... There has been very significant progress made yesterday about the European supervisor. And I can only welcome the agreement that has been reached,” Lagarde said during a press conference in Chile, flanked by the country’s Finance Minister and central bank chief.

“We regard this as one of the three pillars to reinforce the euro zone: the currency pillar, the banking union pillar and the fiscal union pillar. On the banking union pillar clearly progress has been made yesterday and we salute it,” she added.

Chile’s robust economy will grow 5.5 percent this year, upwardly revised from a previous 5 percent forecast, Lagarde also said on Thursday.

But the world’s No. 1 copper producer is not immune to global economic woes and should diversify its economy, she added.

Earlier on Thursday, Lagarde said inadequate tackling of the so-called U.S. fiscal cliff, an acceleration of the euro zone debt crisis, and volatility in commodity prices are potential risks for export-dependent Latin America.

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