Economy
In reply to the discussion: STOCK MARKET WATCH -- Monday, 21 May 2012 [View all]Ghost Dog
(16,881 posts)(Reuters) - Bank of England policymaker Adam Posen said on Monday that the euro zone crisis calls for governments' active role to recapitalise and clean up the region's banking system, saying monetary policy alone won't solve structural problems.
"The biggest thing you need is forcefully injecting enough capital into the banking system," Posen said at a Tokyo conference on global financial regulation hosted by the Columbia Business School.
"The source of current problems is not Greece... The source of current problems in the euro zone is that various financial exposures we all have in the interbank market are not yet resolved because certain financial institutions are insufficiently capitalised, insufficiently disciplined," he said.
The failure in Athens to form a government has stoked fears of a disorderly Greek exit from the common currency that could trigger meltdown of the global banking system...
..."Good monetary policy will not solve structural problems, bad monetary policy will make all structural problems insoluble... Institutions require very active government intervention," he said.
While Japan made headway in cleaning up its banking system after a crisis in the 1990s and the United States and Britain have partially resolved recent woes, "it is a path far from under way in the euro area," he said, adding that countries need not be afraid to nationalise banks.
/... http://uk.reuters.com/article/2012/05/21/uk-britain-boe-posen-idUKBRE84H09U20120521
More, updating, here: http://www.telegraph.co.uk/finance/debt-crisis-live/9278960/Debt-crisis-live.html