Smith cautious about Europe’s economic stability
(2 April 2012 – Australia) ANZ chief executive Mike Smith warned that Europe’s economic crisis may not be over and is likely to flare again.
He cautioned the massive cash injections into the region’s banking system at the end of last year could have only bought time, with some banks still facing the prospect of being nationalised.
The comments, in an address to the Asian and Oceanian Stock Exchanges Federation in Sydney, sounded a sober tone in the face of the positive mood through global markets on the outlook for Europe.
Smith said Europe remained volatile, with a weak banking system and many of the region's governments still struggling with unsustainable debt.
''Despite the relative calm that has followed the Greek bailout, the basic problem still hasn't been resolved - which is, the economies of Greece, Portugal, Spain and Ireland simply aren't competitive while they are part of the eurozone,'' he said.
While ANZ and other Australian banks have relatively small exposure to Europe, Smith is a board member of the Institute of International Finance, the global body that represented banks and other private sector creditors through Greece's debt restructuring deal.
He said a fiscal union was the only way a common currency could be made to work. But this was a ''very long way'' from occurring in Europe.
The comments, in an address to the Asian and Oceanian Stock Exchanges Federation in Sydney, sounded a sober tone in the face of the positive mood through global markets on the outlook for Europe.
Smith said Europe remained volatile, with a weak banking system and many of the region's governments still struggling with unsustainable debt.
''Despite the relative calm that has followed the Greek bailout, the basic problem still hasn't been resolved - which is, the economies of Greece, Portugal, Spain and Ireland simply aren't competitive while they are part of the eurozone,'' he said.
While ANZ and other Australian banks have relatively small exposure to Europe, Smith is a board member of the Institute of International Finance, the global body that represented banks and other private sector creditors through Greece's debt restructuring deal.
He said a fiscal union was the only way a common currency could be made to work. But this was a ''very long way'' from occurring in Europe.
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