The European stock markets have digested the agreement on the Swiss banks positively.
After erasing their initial losses, European banking stocks turned positive again.
European policymakers also hailed the emergency takeover of troubled banking giant Credit Suisse by its Swiss counterpart UBS as a decisive step to support the financial system and reassure markets.
During a hearing at the European Parliament in Brussels, the President of the European Central Bank, Christine Lagarde, welcomed the latest decisions taken by the Swiss authorities, believing that they were helping to restore stable market conditions.
Lagarde said fears that Credit Suisse’s problems would spill over to the euro zone were unfounded.
“We are closely monitoring market developments and stand ready to react if necessary to safeguard price stability and financial stability in the euro area. The euro area banking sector is resilient, with strong capital positions and liquidity”said Christine Lagarde, President of the European Central Bank.
In an earlier coordinated bid, the European Central Bank and five other Western central banks also announced that they would keep liquidity available in the global financial system.
This decision follows the decision of the European Central Bank. to raise its rates by 0.5 points – a significant increase that surprised some observers, but which was deemed “appropriate” by Ms. Lagarde.
The German government echoed Ms Lagarde’s remarks. For Wolfgang Büchner, spokesperson for the German government:
“The situation is not comparable to that of 2008 and 2009. Lawmakers and bank supervisors in Europe have learned the lessons of the 2008 global financial crisis and have considerably intensified banking regulation.”
Credit Suisse is the latest and greatest victim of a crisis of confidence that has already led to the bankruptcy of two mid-sized US banks.
Switzerland’s second-largest lender was considered one of the world’s 30 largest banks, which is why Swiss officials rushed the takeover.