http://www.ft.com/cms/s/0/4dfcca24-9e46-11e0-8e61-00144feabdc0.html#axzz1QLt4FzGl
Sir Mervyn King, governor of the Bank of England, warned on Friday that stopgap measures to extend new loans to countries such as Greece, Portugal and Ireland would not solve the eurozone debt crisis.
“Right through this crisis from the very beginning ... an awful lot of people wanted to believe that it was a crisis of liquidity,” Sir Mervyn said. “It wasn’t, it isn’t. And until we accept that, we will never find an answer to it. It was a crisis based on solvency ... initially financial institutions and now sovereigns.”
“Providing liquidity can only be used to buy time,” Sir Mervyn said. “Simply the belief, ‘oh we can just lend a bit more’, will never be an answer to a problem which is essentially one about solvency.”
Sir Mervyn King, governor of the Bank of England, warned on Friday that stopgap measures to extend new loans to countries such as Greece, Portugal and Ireland would not solve the eurozone debt crisis.
“Right through this crisis from the very beginning ... an awful lot of people wanted to believe that it was a crisis of liquidity,” Sir Mervyn said. “It wasn’t, it isn’t. And until we accept that, we will never find an answer to it. It was a crisis based on solvency ... initially financial institutions and now sovereigns.”
“Providing liquidity can only be used to buy time,” Sir Mervyn said. “Simply the belief, ‘oh we can just lend a bit more’, will never be an answer to a problem which is essentially one about solvency.”
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