ECONOMY

PM praises EU’s efforts to boost faith in banks

The turmoil on the credit markets and the current state of global as well as the eurozone and Greek economies were at the focus of discussions between Prime Minister Costas Karamanlis and European Central Bank (ECB) President Jean-Claude Trichet on Thursday. Karamanlis stressed afterward that global developments were unprecedented in the postwar period, adding that the major credit crisis coincided with the subprime crisis in the USA, and both in tandem with the rise in global inflation, a dangerous combination for most of the countries around the world. He also stressed that the impact of the credit crisis had spread to Europe as a result of the interdependence of today’s world, resulting in liquidity problems on both the European interbank market and in the operation of European banks. The premier expressed satisfaction, however, with the concerted and decisive way in which the EU leadership has acted in the past few days. «We adopted a broad plan that contains a series of measures, the goal of which is to restore citizens’ and investors’ confidence in the banking system,» he said, noting that the plan guarantees the liquidity of banks so that they may continue to carry out their role. «These measures have already brought results, as interest rates on the interbank market have started to decline,» he elaborated. Karamanlis described the role of the ECB as «particularly positive,» noting that «from the very first moment, under the guidance of its president, it provided substantial liquidity to the banking system.» He said the ECB had displayed full comprehension of its wider role in the development of the European economy, and expressed his conviction that the ECB, in cooperation with EU governments, would continue to contribute decisively to the improvement of living standards in Europe. Karamanlis further briefed Trichet on the government’s decision to adopt into law a minimum guarantee on deposits and on the program for fortifying the Greek credit system.