BIS central bankers say 'fiscal soundness' is key: Trichet

10th January 2011, Comments 0 comments

Central bankers stressed Monday that fiscal soundness was key to maintaining a healthy global economy, European Central Bank chief Jean-Claude Trichet said after a meeting at the BIS.

"It was (the) absolutely clear understanding by all of us that fiscal soundness -- and this is true for all at the global level -- was ... certainly very important to consolidate the health of the global economy," the ECB head said.

"The message for all economies is to have sound fiscal policies," Trichet stressed, after a regular bi-monthly meeting of a group of major central bankers at the Bank for International Settlements.

Trichet's comments came as Portugal faced increasing pressure over its high debt, with many analysts viewing it as the next eurozone country most likely to seek a bailout after Ireland and Greece last year.

The ECB chief, who is the spokesman for the group of central bankers, said however that the meeting did not discuss the issue of Portugal.

Separately in Brussels, the European Commission on Monday denied that Portugal was under pressure to seek a bailout in order to stop the euro debt crisis from engulfing it and other nations such as Spain and Belgium.

Overall, central bankers said that global recovery was confirmed and that emerging economies in particular were forging ahead with impressive growth.

"The recovery (is) confirmed in the eyes of the global economy meeting -- growth is there and particularly impressive in the emerging economies," Trichet told reporters.

"The real economy has demonstrated capacity to behave better than the previous projections and forecasts. That was observed in many countries. It has also been the case until now in the euro area," he added.

However, Trichet also cautioned that rapidly-growing emerging economies were also facing the threat of inflation.

"I see the inflationary threat present as some kind of general feature in the emerging world. That is something you do not see necessarily in the advanced (economies)," he said.

This is therefore "no time for complacency," Trichet warned.

© 2011 AFP

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