Institutional sentiment in Germany may have improved markedly since late last year, but the June 2009 edition of the European Central Bank Financial Stability Review released yesterday paints a more cautious picture.
ECB Vice President Lucas Papademos said deterioration in the global economy as well as sizable downward revisions to growth forecasts have added to the "stresses on global and euro area financial systems."
He added that there have been increasing signs of an "adverse feedback loop between the real economy and the financial sector" which poses new challenges for the safeguarding of financial stability.
His remarks coincide with a report by ECB financial stability expert Dejan Krusec that I detailed last week at Examiner.com that problems may surface in 2010. See Problems may be brewing in Europe.
Eurozone policymakers were slow to react to the deteriorating economy last year. I hope they are more proactive this time around. And I hope that's not too much to ask for.
Tuesday, June 16, 2009
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