Euromed central bankers say economic recovery depends on advanced economies

08:53, October 29, 2010      

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European and Mediterranean central bank governors said on Thursday that economic recovery largely depends on trends in the economic activity in advanced economies, particularly in the European Union.

A statement issued at the end of a two-day seminar held in Cyprus' western city of Paphos also warned that inflation rates in some Mediterranean countries remain high, especially relating to food price developments.

The seminar brought together central bankers from the eurozone and countries surrounding the Mediterranean, namely Albania, Algeria, Croatia, Egypt, Israel, Jordan, Lebanon, Mauritania, Morocco, Syria, Tunisia and the Palestinian National Authority.

It was also attended by European Central Bank (ECB) President Jean-Claude Trichet and representatives of the European Commission and the European Investment Bank.

The statement said participants focused on the challenges for monetary policy in Mediterranean countries on the way to economic recovery, on experiences with fixed-peg exchange rate regimes and on the impact of the global financial turmoil on the banking sector and financial stability in the region.

"Seminar participants underlined the fact that the challenges for monetary policy have changed dramatically in the last two years," the statement said.

It added inflation rates in some Mediterranean countries remained relatively high as a result of a less pronounced economic slowdown.

Some Mediterranean countries confirmed their intention to move toward greater exchange rate flexibility and more domestically- oriented targets as a result of the constraints resulting from exchange rate pegs and tightly-managed floats.

The ECB president had earlier said it was not clear which would be the best way for southern Mediterranean countries to proceed in regard to their foreign exchange rates.

"There is no quick fix, there is no solution which is the best in the world," Trichet told reporters.

He added that at present there is more volatility as regards the pressure on exchange rates than in the period before.

Commenting on the pace of the economic recovery, Trichet said that prudence and caution is still needed. He also said that he does not fully support proposed European Union Budget rules, which are tougher than the current ones and with new and faster sanctions, but would require more political will than the initial proposals by the European Commission.

Source: Xinhua


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