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14/01/2009 - OECD Secretary-General Angel Gurría has called for a more centralised and integrated supervision of Euro area banks and financial markets to help prevent a recurrence of the financial turmoil which triggered the current recession.
Presenting the OECD Economic Survey of the Euro Area, Mr Gurría said policy-makers should create either a single EU-wide supervisor or a central agency to work in conjunction with national supervisors.
Effective coordination, he added, was key to re-establishing confidence and hastening a return to economic growth.
Mr Gurría said measures taken by European governments have helped prevent a systemic collapse in financial markets during the current crisis - even though the system is still under strain and doubts remain as to whether sufficient money has been set aside to recapitalise banks and to acquire troubled assets.
The Euro area survey paints a bleak near-term outlook for the economy. Rising unemployment is encouraging households to cut spending while the global downturn has weakened demand for European exports.
Against this backdrop and amid a sharp easing of inflation, the survey says there is scope for the European Central Bank to cut interest rates further. Meanwhile, government initiatives to stimulate the economy through public spending should be “timely, temporary and targeted.”
In tackling the immediate crisis it is important for governments not to undermine the long-term dynamism of their economies, he warned.
“It is essential that national differences in implementation do not lead to distortions in competition and that consideration be given to how governments exit from their commitments when the turmoil eventually dissipates,” he said. “In addressing financial market vulnerabilities, governments must be careful not to sow the seeds of future problems." (Read Gurría's speech).
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