Trichet speaks out against speculators

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Trichet speaks out against speculators

Trichet speaks out against speculators
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The head of the European Central Bank, Jean-Claude Trichet, has called for tougher regulation and oversight of hedge fund speculators.

At a conference at the European Commission, Trichet spoke out against the speculative use of credit default swaps.

They are used to insure against debt default and have been blamed by some for worsening Greece’s debt crisis.

Trichet said: “I would like to highlight the importance that certain financial instruments which were introduced in consideration of their positive effects for the hedging of risks should not be misused. I share the consensus at global level that regulators should be equipped with appropriate tools to be able to investigate and act in an effective and coordinated manner.”

At the same conference it was revealed the
European Union is considering making the banks pay for an emergency fund should one of them go bankrupt:

The EU Internal Market Commissioner, Michel Barnier, said: “The financial institutions should contribute to a resolution fund. It’s about making contingency plans. It is also an ethical issue.”

Barnier added: “Why should our citizens foot the bill?”

European governments, which were forced to bail out overstretched lenders, are now looking for a way of preventing a repeat.

But the Bank of England’s Deputy Governor, Paul Tucker, was sceptical and said such a fund would have to be “absolutely ginormous, maybe a trillion euros.”