RTTNews - Extensive interventions made by central banks and national governments may have resulted in a slowdown in the rapid pace of economic downturn, yet the future remains uncertain, European Central Bank Governing Council member Axel Weber said Friday.
We are currently witnessing the fact that these extensive interventions are having some stabilizing effects on financial markets and have, judging by the initial signs, probably led to a slowdown in the rapid pace of the downswing in the real economy. Nevertheless, the future outlook remains uncertain, the policymaker said in an opening speech at the CFS research conference in Frankfurt.
Weber, who is also the president of the Deutsche Bundesbank, cautioned that green shoots in the financial markets and an easing of the downturn in the real economy should not divert focus from the shortcomings in regulation and supervision that were exposed during the crisis.
He urged that necessary reforms must be carried out as soon as possible as the international will for reform has created a window of opportunity for a redesign. That window will not remain open for ever, however. Weber said the current easing in the financial markets should be used vigorously to enhance the resilience of the financial system.
One key point on the international agenda is strengthening the supervisory architecture, focusing on two aspects: first, intensifying macroprudential analysis; second - and this applies to Europe in particular - furthering the development of cross-border banking supervision.
Weber noted that neither financial market integration nor the supervisory architecture has yet reached its final stage in Europe. However, this evolutionary stage resulted in a sustainable foundation that was not disturbed even by the tremors of the financial crisis, he said.
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