2023-11-13 13:53:38
The European Central Bank (ECB) warned on Monday of the risk of a new debt crisis in the euro zone, in a context of high rates and widening budget deficits.
“Higher financing costs and less prudent fiscal policies could reignite concerns about the sustainability of sovereign debt, particularly in countries where debt levels are already high”warned Luis de Guindos, vice-president of the ECB, in a speech in Frankfurt.
Between 2010 and 2012, Europe faced a debt crisis, starting with Greece, which was overindebted and unable to refinance itself on the markets, before spreading to other countries. The episode had raised fears of a risk of implosion of the euro zone.
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In the current period, however, the “spreads” on the government bond markets – yield differences between the German bond, which is the benchmark, and those of other countries in the euro zone – have “remained contained”, noted the central banker.
The ECB’s key rates are today at their highest, with the main rate at 4%, to curb excessively high inflation, in the wake of the surge in energy prices.
Mr. de Guindos reaffirmed Monday that the ECB will maintain its high rates “for a long enough time” so as to “contribute substantially” to achieving an inflation target of around 2%.
At the same time, fiscal policy in the eurozone should aim to make the economy “more productive and gradually reduce high public debt”, he added.
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