Sunday 21 January 2018

Faber backs Government's 'unconventional' debt deal

Colm Kelpie

Colm Kelpie

THE chairman of the German Stock Exchange has signalled support for the Government's quest for a deal on Ireland's crippling bank debt.

Dr Joachim Faber, the chair of the Supervisory Board of Deutsche Borse AG, said shifting the bank debt to Europe was "unconventional", but added that unconventional measures were needed for Ireland to reduce its budget deficit target to 3pc.

In an address to the Institute of Directors in central Dublin, Dr Faber also called for an end to the focus on austerity at the European level and for a shift towards growth policies.

"We probably have to be pragmatic here and take the recapitalisation of the banks on the shoulders of the European Union," he said.

Dr Faber said the failure by Ireland to cut its budget deficit to 3pc as planned would stymie growth and cause a contraction in the economy.

However, Dr Faber did not refer to the statement made just weeks ago by the economically powerful states of Germany, Finland and the Netherlands, who stated they believed the summit on June 29 only agreed that the European Stability Mechanism would cover future debt and not legacy problems, thereby casting doubt on a deal.

The former chief executive of Allianz Global Investors said that the rest of Europe believed that Ireland was the only European country after 2009 that acted decisively by introducing cuts that "probably would not be possible at one level in some of the other member countries".

He said that Ireland had now established a level of trust with the capital markets.

Dr Faber added that the world believed Europe was in deep trouble and "it is not clear whether Europe will make it".

Speaking ahead of his address, Dr Faber said the restructuring of the banking sector was a precondition for regaining growth in Europe.

"Blaming the banks is not enough. Bankers must step out of their isolation and actively re-engage with policymakers to deliver a new banking landscape in Europe," he said.

"Europe is as much of a problem as it is an opportunity for the future.

"It has been more than five years since the crisis began; we need to overcome the state of debate, agree a solution and act."

Irish Independent

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