Trichet warns debt crisis has become ‘systemic’
OUTGOING European Central Bank president Jean-Claude Trichet has warned the European debt crisis has reached "a systemic" dimension as it moves from from smaller countries to larger ones.
“The crisis is systemic and must be tackled decisively,” he said in Brussels today.
“Sovereign stress has moved from smaller economies to some of the larger countries,”
European leaders have set an October 23 deadline to get the crisis in order against the backdrop of speculation the 17-country currency might not be able to survive in its current form while Greece teeters on the brink of default.
Owners of Greek bonds could face writedowns of more than 60pc, according to Luxembourg Prime Minister Jean-Claude Juncker with Germany pushing for higher haircuts than the 21pc agreed in July.
However, many European banks, including French institutions like Credit Agricole, have big exposures to Greek debt.
Today Slovakia votes on whether the scope of the €440bn European rescue fund should be expanded while the IMF releases a report on Greece’s economic prospects.
Meanwhile, Taoiseach Enda Kenny has said he believes progress in tackling to crisis is being made.
Mr Kenny will travel to Brussels on Thursday for talks with European Commission president José Manuel Barroso which will include discussions on the December budget where cuts of €4bn look increasingly likely.
“I had six formal bilaterals there and I had a number of other conversations with leaders and we agreed to continue this conversation in Brussels on Thursday,” he said. “Obviously the situation as far as the euro zone countries are concerned will be the focus of our attention, as will the questions in regard to recapitalisation, restructuring and obviously the crisis,” he said.