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UPDATE 1-ECB's Nowotny: no systemic banking crisis in Europe
September 30, 2008 / 10:53 AM / 9 years ago

UPDATE 1-ECB's Nowotny: no systemic banking crisis in Europe

(Adds more quotes, detail, background)

VIENNA, Sept 30 (Reuters) - Europe’s banking sector is not in a systemic crisis and does not need a bailout similar to the one planned in the United States, European Central Bank Governing Council member Ewald Nowotny said on Tuesday.

“In the United States there is an actual systemic crisis, in Europe there is not,” Nowotny said in an interview broadcast by Austrian state radio ORF. “Such a comprehensible programme is not necessary in Europe,” he added, referring to the U.S. plan.

Without giving any specifics, Nowotny said European authorities including the ECB would continue to provide sufficient liquidity to the banking sector and would prevent the collapse of banks relevant for the stability of the system.

The ECB has flooded money markets with extra liquidity in cooperation with other major central banks in a bid to ease money market tensions, and Nowotny said it was ready to continue.

“It is clear to us that there must be no collapse of a bank which is relevant to the system, and there won’t be one,” he said. “This means that we are ready to give sufficient liquidity injections.”

“I think we have it under control,” he said, when asked about the situation in Europe.

Asked whether the financial crisis would result in lower growth and higher unemployment, Nowotny said: ”Realistically, you have to see it that way.

“We have a slowdown in every part of the world, and this cumulative effect is certainly the biggest challenge at the moment,” he said. (Reporting by Boris Groendahl; editing by Patrick Graham)

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