Sunday

21st Jan 2018

Markets returning to 'normal', says Trichet

  • Growth in France, Germany and Italy is less than had been expected, according to Tuesday figures (Photo: European Commission)

European Central Bank (ECB) chief Jean-Claude Trichet has said the markets are "progressively" returning to normal following days of turbulence prompted by the US crisis over high risk mortgages.

The ECB made a total of four cash interventions since last Thursday after investors panicked when it became clear that European banks were vulnerable to the US turmoil.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

France's largest bank BNP Paribas froze payments on three funds invested in the sector, which involves lending money to those with a poor credit history.

The total pumped into the European banking system to help keep lending activity from freezing up came to around €200 billion - on Tuesday (14 August) the bank gave another fresh cash injection of €7.7 billion.

The ECB "will continue to monitor the situation while euro-area financial markets in general are going back to normal functioning,'' Mr Trichet said in a statement on Tuesday.

But despite his soothing words the markets continued to be spooked. More turmoil in the global money markets on Tuesday sent stock prices around the world falling.

Already analysts are looking to what the events may mean for the bank's next move on interest rates with a rate raised scheduled for next month.

Before the current credit crisis, Mr Trichet had signalled a rate rise on 6 September by referring to "strong vigilance" - seen as code for a hike.

However, the ECB is set to come under strong pressure in some quarters not to raise the rates, particularly after the release yesterday of surprisingly weak growth figures for the 13-nation eurozone.

The figures showed the region expanded by just 0.3 percent with Germany, France and Italy all recording poor growth.

The figures may also exacerbate tensions between Mr Trichet and France's Nicolas Sarkozy with the French president already continuously criticising the bank for not doing enough for growth.

Sarkozy calls for more market monitoring after recent turmoil

After days of turbulence on global markets prompted by US mortgage sector problems, questions are being asked about whether more could have done to avoid the crisis. The EU is looking into the role played by rating agencies while France has called for greater financial transparency.

German coalition deal aims for 'Macron-lite' EU renewal

Merkel and Schulz clear the first hurdle of coalition talks, but the SPD's full membership backing is still needed. The likely coalition parties express support for Macron's eurozone reform ideas, but remain cautious.

News in Brief

  1. Germany confirms attendance at air quality summit
  2. Nearly half of 'fixed' Dieselgate cars show problems
  3. YouTube, Twitter, Facebook up hate speech deletion
  4. UK mulls bridge to France
  5. German far-right float anti-asylum bill
  6. EU Parliament to investigate glyphosate-decision process
  7. 'Mutagenesis' falls outside EU's GMO rules, says EU top lawyer
  8. Decision on Polish MEP's Nazi-era slur postponed

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic Solutions for Sustainable Cities: New Grants Awarded for Branding Projects
  2. Mission of China to the EUTrade Between China, Belt and Road Countries up 15%
  3. Nordic Council of MinistersOresund Inspires Other EU Border Regions to Work Together to Generate Growth
  4. Mission of China to the EUTrade Between China, Belt and Road Countries up 15%
  5. AJC Transatlantic InstituteAJC Calls on EU to Sanction Iran’s Revolutionary Guards, Expel Ambassadors
  6. Dialogue PlatformRoundtable on "Political Islam, Civil Islam and The West" 31 January
  7. ILGA EuropeFreedom of Movement and Same-Sex Couples in Romania – Case Update!
  8. EU2017EEEstonia Completes First EU Presidency, Introduced New Topics to the Agenda
  9. Bio-Based IndustriesLeading the Transition Towards a Post-Petroleum Society
  10. ACCAWelcomes the Start of the New Bulgarian Presidency
  11. Mission of China to the EUPremier Li and President Tusk Stress Importance of Ties at ASEM Summit
  12. EU2017EEVAT on Electronic Commerce: New Rules Adopted

Latest News

  1. Middle East, Messi and missing MEPs on the agenda This WEEK
  2. Instagram and Google Plus join EU anti-hate speech drive
  3. EU wants 'entrepreneurship' in education systems
  4. UK loses EU satellite centre to Spain
  5. Pay into EU budget for market access, Macron tells May
  6. Ethiopian regime to get EU migrants' names
  7. EU to lend Greece up to €7bn more next week
  8. Nato prepares to take in Macedonia