BERLIN, Dec 12 (Reuters) - The European Central Bank is confident Greece will take appropriate structural measures to tackle the cause of its fiscal problems, ECB Vice-President Lucas Papademos said on Saturday.
Papademos said the fiscal situation in Greece was 'extremely serious' but the government had committed itself to addressing fiscal imbalances.
'We expect and are confident that the necessary measures wil be taken, first, to achieve in full the budget target for reducing the budget deficit in 2010, and second, to achieve fiscal consolidation,' Papademos told reporters on the sidelines of a banking conference.
Fitch cut debt-stricken Greece's sovereign rating to BBB+ with a negative outlook last Tuesday, citing a fiscal deterioration.
Turning to monetary policy, Papademos said it could be used to help stem market excesses, but it was better to use several tools such as macroprudential oversight to safeguard financial stability.
'There may be scope for the use of monetary policy as an instrument to also contribute to financial stability .. but the implementation is not straightforward,' he said.
'In general, if you want to achieve a number of objectives --- the specific objectives I have in mind now are price stability as well as financial stability -- it is appropriate, as well as necessary, to use more than one policy tool.'
Earlier, in a speech, Papademos said regulation and oversight would foster rather than hinder economic growth and innovation.
RISKS TO FINANCIAL STABILITY
Papedemos said central banks had cooperated closely and effectively to address the consequences of the crisis.
'We have avoided the meltdown of the financial system and through a variety of measures we are contributing to the return of the financial system to conditions of normality,' he said.
Despite an improvement in the financial markets, they were still facing challenges and adjustment and had not reached the same heady, pre-crisis levels, Papademos told reporters.
'Although central banks are providing abundant liquidity to banks...credit expansion is decelerating,' he said.
'The overall financial conditions have not reached the stage that one could say are signalling risks for financial stability.'
Papademos said the ECB was going to take some steps to help relaunch securitisation 'on a sound basis' so as to facilitate the provision of credit and the better distribution of risk.
'In order to revive the securitisation market, it will be necessary though not sufficient to improve the transparency...of the products.'
'Asset-backed securities are an instrument that we accept as collateral and there are various ways we could try to enhance the transparency associated with these particular instruments.'
(Reporting by Sarah Marsh and Paul Carrel; Editing by Victoria Main) Keywords: ECB PAPADEMOS/ (paul.carrel@reuters.com; +49 30 2888 5214; Reuters Messaging: rm://paul.carrel.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Papademos said the fiscal situation in Greece was 'extremely serious' but the government had committed itself to addressing fiscal imbalances.
'We expect and are confident that the necessary measures wil be taken, first, to achieve in full the budget target for reducing the budget deficit in 2010, and second, to achieve fiscal consolidation,' Papademos told reporters on the sidelines of a banking conference.
Fitch cut debt-stricken Greece's sovereign rating to BBB+ with a negative outlook last Tuesday, citing a fiscal deterioration.
Turning to monetary policy, Papademos said it could be used to help stem market excesses, but it was better to use several tools such as macroprudential oversight to safeguard financial stability.
'There may be scope for the use of monetary policy as an instrument to also contribute to financial stability .. but the implementation is not straightforward,' he said.
'In general, if you want to achieve a number of objectives --- the specific objectives I have in mind now are price stability as well as financial stability -- it is appropriate, as well as necessary, to use more than one policy tool.'
Earlier, in a speech, Papademos said regulation and oversight would foster rather than hinder economic growth and innovation.
RISKS TO FINANCIAL STABILITY
Papedemos said central banks had cooperated closely and effectively to address the consequences of the crisis.
'We have avoided the meltdown of the financial system and through a variety of measures we are contributing to the return of the financial system to conditions of normality,' he said.
Despite an improvement in the financial markets, they were still facing challenges and adjustment and had not reached the same heady, pre-crisis levels, Papademos told reporters.
'Although central banks are providing abundant liquidity to banks...credit expansion is decelerating,' he said.
'The overall financial conditions have not reached the stage that one could say are signalling risks for financial stability.'
Papademos said the ECB was going to take some steps to help relaunch securitisation 'on a sound basis' so as to facilitate the provision of credit and the better distribution of risk.
'In order to revive the securitisation market, it will be necessary though not sufficient to improve the transparency...of the products.'
'Asset-backed securities are an instrument that we accept as collateral and there are various ways we could try to enhance the transparency associated with these particular instruments.'
(Reporting by Sarah Marsh and Paul Carrel; Editing by Victoria Main) Keywords: ECB PAPADEMOS/ (paul.carrel@reuters.com; +49 30 2888 5214; Reuters Messaging: rm://paul.carrel.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.