Decisive action is needed urgently to stop the euro zone debt crisis threatening global economic stability according to the head of the European Central Bank Jean-Claude Trichet.
Speaking in his capacity as chairman of the European Systemic Risk Board, which was created to avoid a repeat of the 2008 financial crisis, Trichet was speaking to a European Parliament committee.
He said: “The crisis is systemic and must be tackled decisively, national governments and authorities as well as European institutions must rise to the challenge and act together swiftly, further delays are only contributing to aggravate the situation.”
There has been growing international alarm over Europe’s inability to draw a line under the debt crisis, which was trigged by Greece.
At the same time in Athens, inspectors from the EU, the European Central Bank and the International Monetary Fund said Greece is likely to receive the eight billion euro aid instalment it needs to stave off bankruptcy in early November
The inspectors also criticised Greece for not moving fast enough to reform its economy, saying that despite some fiscal progress Athens was lagging behind on privatisations and structural reforms needed to exit its debt crisis.
“It is essential that the authorities put more emphasis on structural reforms in the public sector and the economy more broadly,” the inspectors’ statement said.
They will take at least a week to give a full report to EU ministers and the IMF board which will take the final decision on the aid. Greece has cash until November and faces almost three billion euros worth of bonds expiring in December.
The inspectors confirmed Greece would miss its 2011 deficit target because of a deeper than expected recession but also due to slippages in implementation.
Additional measures, if applied rigorously, should be sufficient to meet 2012 targets. But they said even more belt-tightening would be required to achieve 2013-2014 targets and that should be in place by mid-2012.
An economic recovery is now only expected in Greece from 2013.