By Simone Meier and Tian Ying
Sept. 9 (Bloomberg) -- European Central Bank President Jean- Claude Trichet and People's Bank of China Governor Zhou Xiaochuan said the impact of credit-market turbulence has been limited so far, while expressing uncertainty about the outlook.
The prospects for growth in the economy of the 13 euro nations are ``still good'' although ``uncertainties are augmenting,'' Trichet told Italian television network RAI late Sept. 7. Zhou today in Basel, Switzerland said that China would ``experience some impact,'' if global growth were hurt by the credit crisis.
A global flight from risky assets that began last month has forced the ECB and other central banks to inject more than $400 billion of emergency funds into money markets on concern it may sap economic growth. U.S. employment unexpectedly fell in August for the first time in four years, prompting speculation the credit crunch is affecting the wider economy.
For now, central banks worldwide are refraining from raising rates as they assess how the credit squeeze will affect growth.
ECB council member Miguel Angel Fernandez Ordonez told reporters in Basel today that it's ``prudent'' to wait with interest-rate decisions in order to ``make an assessment of the current turmoil.'' Ordonez, like China's Zhou, was attending a regular meeting of the Bank for International Settlements.
About $139 billion of commercial paper falls due in the next 10 days, Britain's Sunday Telegraph newspaper reported today, citing David Brickman, head of European credit strategy at Lehman Brothers Holdings Inc.
Commercial Paper
As much as $46 billion of the notes mature on Sept. 17 alone and banks have been stockpiling cash in preparation, causing credit markets to seize up, the London-based newspaper said.
Commercial paper is sold in a variety of maturities of 270 days or less. The coming 10 days include a so-called double- rollover week, when quarterly loans expire along with shorter- term notes, which may exacerbate the crisis that has hit the money markets, the Telegraph said.
The ECB on Sept. 6 left its key rate at 4 percent, shelving a planned increase. The Bank of England the same day kept its main lending rate at 5.75 percent. Central banks in Indonesia, Australia and Canada also opted to keep their benchmark on hold last week. The Bank of Japan last month stepped back from plans to raise its key rate from 0.5 percent.
`Clear Recovery'
``Our central scenario remains one of a clear recovery,'' European Union Economic and Monetary Affairs Commissioner Joaquin Almunia said yesterday at a conference in Cernobbio, Italy. ``We have been monitoring the situation closely. It's too early to draw a conclusion.''
ECB Governing Council member Vitor Constancio told Portuguese TV station RTP1 yesterday the elements that will determine whether the turbulence affects the economy include the duration of the crisis and the scale of a U.S. slowdown. His Irish counterpart John Hurley said in Basel today that European ``growth is good, but there is a great deal of uncertainty.''
The ECB on Sept. 6 forecast the euro-region economy to expand about 2.5 percent this year and 2.3 percent in 2008. It previously had projected growth of about 2.6 percent this year. In 2006, the economy grew 2.7 percent, the fastest pace since the turn of the century.
For Europe, credit-market turmoil worsened Aug. 9 after BNP Paribas SA acknowledged its vulnerability to increasing defaults on U.S. subprime mortgages. Landesbank Baden-Wuerttemberg, Germany's largest state-owned bank, on Aug. 27 agreed to buy Landesbank Sachsen Girozentrale after the lender was bailed out.
China's `Exposure'
In China, financial institutions' ``exposure'' to the U.S. subprime mortgage crisis is ``not significant,'' Zhou said today. ``Unless the situation deteriorates,'' the impact of market turbulence on Chinese financial institutions and the economy is ``up to now estimated to be quite limited.''
Governors from the world's largest central banks including the U.S. Federal Reserve, the ECB, the Bank of Japan and the People's Bank of China meet every two months in Basel under the auspices of the Bank for International Settlements, the central bank of the world's central banks.
Sept. 9 (Bloomberg) -- European Central Bank President Jean- Claude Trichet and People's Bank of China Governor Zhou Xiaochuan said the impact of credit-market turbulence has been limited so far, while expressing uncertainty about the outlook.
The prospects for growth in the economy of the 13 euro nations are ``still good'' although ``uncertainties are augmenting,'' Trichet told Italian television network RAI late Sept. 7. Zhou today in Basel, Switzerland said that China would ``experience some impact,'' if global growth were hurt by the credit crisis.
A global flight from risky assets that began last month has forced the ECB and other central banks to inject more than $400 billion of emergency funds into money markets on concern it may sap economic growth. U.S. employment unexpectedly fell in August for the first time in four years, prompting speculation the credit crunch is affecting the wider economy.
For now, central banks worldwide are refraining from raising rates as they assess how the credit squeeze will affect growth.
ECB council member Miguel Angel Fernandez Ordonez told reporters in Basel today that it's ``prudent'' to wait with interest-rate decisions in order to ``make an assessment of the current turmoil.'' Ordonez, like China's Zhou, was attending a regular meeting of the Bank for International Settlements.
About $139 billion of commercial paper falls due in the next 10 days, Britain's Sunday Telegraph newspaper reported today, citing David Brickman, head of European credit strategy at Lehman Brothers Holdings Inc.
Commercial Paper
As much as $46 billion of the notes mature on Sept. 17 alone and banks have been stockpiling cash in preparation, causing credit markets to seize up, the London-based newspaper said.
Commercial paper is sold in a variety of maturities of 270 days or less. The coming 10 days include a so-called double- rollover week, when quarterly loans expire along with shorter- term notes, which may exacerbate the crisis that has hit the money markets, the Telegraph said.
The ECB on Sept. 6 left its key rate at 4 percent, shelving a planned increase. The Bank of England the same day kept its main lending rate at 5.75 percent. Central banks in Indonesia, Australia and Canada also opted to keep their benchmark on hold last week. The Bank of Japan last month stepped back from plans to raise its key rate from 0.5 percent.
`Clear Recovery'
``Our central scenario remains one of a clear recovery,'' European Union Economic and Monetary Affairs Commissioner Joaquin Almunia said yesterday at a conference in Cernobbio, Italy. ``We have been monitoring the situation closely. It's too early to draw a conclusion.''
ECB Governing Council member Vitor Constancio told Portuguese TV station RTP1 yesterday the elements that will determine whether the turbulence affects the economy include the duration of the crisis and the scale of a U.S. slowdown. His Irish counterpart John Hurley said in Basel today that European ``growth is good, but there is a great deal of uncertainty.''
The ECB on Sept. 6 forecast the euro-region economy to expand about 2.5 percent this year and 2.3 percent in 2008. It previously had projected growth of about 2.6 percent this year. In 2006, the economy grew 2.7 percent, the fastest pace since the turn of the century.
For Europe, credit-market turmoil worsened Aug. 9 after BNP Paribas SA acknowledged its vulnerability to increasing defaults on U.S. subprime mortgages. Landesbank Baden-Wuerttemberg, Germany's largest state-owned bank, on Aug. 27 agreed to buy Landesbank Sachsen Girozentrale after the lender was bailed out.
China's `Exposure'
In China, financial institutions' ``exposure'' to the U.S. subprime mortgage crisis is ``not significant,'' Zhou said today. ``Unless the situation deteriorates,'' the impact of market turbulence on Chinese financial institutions and the economy is ``up to now estimated to be quite limited.''
Governors from the world's largest central banks including the U.S. Federal Reserve, the ECB, the Bank of Japan and the People's Bank of China meet every two months in Basel under the auspices of the Bank for International Settlements, the central bank of the world's central banks.
