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Thursday, March 30, 2023

OECD: “We are in a very different situation than in 2008”

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The OECD ruled out this Friday that there is a risk of a “systemic crisis” comparable to that of 2008, days after the bankruptcy of the American bank SVBwhich sparked a wave of stock market panic among bank stocks.

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“We are in a very different situation than in 2008”Álvaro Pereira, interim chief economist at the Organization for Economic Cooperation and Development (OECD), said at a press conference in Paris.

“We have created stronger regulation, central banks and regulators have also learned from past crises (…) and most of the world’s banks are very well capitalized,” explained the economist.

“I know we may see turbulent episodes, but we don’t see this as a systemic risk at this time”said Álvaro Pereira, referring to the bankruptcy of Silicon Valley Bank.

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“Obviously, there is increased risk to financial stability as long as there is volatility in the markets, but we think the risks of broader contagion are rather limited”added the Secretary General of the OECD, Mathias Cormann.

The organization took advantage of the presentation of its new economic projections to express its support for the ECB. On Thursday, the issuing institute decided, despite the volatility in the stock markets, raise interest rates by half a percentage point to combat inflation in the euro zone, which stood at 8.5% year-on-year in February.

“The main problem we continue to face is inflation,” Pereira said. to stop it, “We think it is very important that monetary policy continue in the same direction”he added.

Source: Ambito

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