The European Central Bank’s decision to move ahead with a 50 basis-point increase in interest rates last week in a context of market instability shows the institution is confident in the region’s banks, Governing Council member Francois Villeroy de Galhau said.
(Bloomberg) — The European Central Bank’s decision to move ahead with a 50 basis-point increase in interest rates last week in a context of market instability shows the institution is confident in the region’s banks, Governing Council member Francois Villeroy de Galhau said.
“It showed our confidence both in the solidity of French and European banks, and in our anti-inflation strategy,” Villeroy said on France Inter radio. “We will take decisions meeting-by-meeting depending on economic data, but we remain determined to beat inflation.”
The ECB must be “extremely vigilant” on underlying inflation as it takes future decisions, he added.
“We can’t let inflation set in: it is a social and economic sickness, and we’re hear to treat it,” Villeroy said.
France’s banks have diversified, profitable business models and large liquidity and capital reserves, and do not suffer from the same issues of mid-sized US banks or “problem bank” Credit Suisse, Villeroy said.
“There is no issue with French banks,” he added.
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