One of Europe’s top bankers says the world’s leading economies must work together more closely to survive the current financial turmoil. Jean-Claude Juncker, the head of the euro-zone banking group, said Europe can trust its banks, but a more coordinated strategy is needed:
“We cannot go on with a kind of ‘ad hoc’ approach,” he said. “We need a more systematic approach at the level of the euro-zone and at the level of the European Union.”
The European Central Bank will keep providing financial support during the crisis, but said lessons must be learned. It said rules must be revised to restrain risky loans during boom times, thus preventing collapse in a bust.
Karel Lannoo, an analyst at the Center for European Policy Studies, said:
“My big kind of lesson from this is that we have said to the banks to be more European but we have not adapted a supervisory structure to that, and the supervisory structure has not become pan-European, it has probably remained too national and is not sufficiently integrated. But European Central Bank directors often say they are helping the markets but we do not know, we have no detailed information about the solidity or the soundness of the financial situation.”
Financial institutions on both sides of the Atlantic are wobbling. On Sunday the Belgian-Dutch bank Fortis needed rescuing, while yesterday Paris and Brussels flew to the aid of Dexia. The G8 club of wealthy nations and its European allies is expected to meet in Paris on Saturday to fine-tune their tactics for resolving the crisis.