Thursday, June 23, 2011

Trichet says red for banks

After meeting with the European Systemic Risk Board (ESRB), ECB president Trichet says that he sees risk signals that are flashing red. If there is a dashboard, it is not clear what are all of the components. The website does not provide good advice. 

Trichet's view will provide more market uncertainty even though the systemic risk issues has to be addressed. Without clear guidance what should the markets think? What is the criteria for red? Is this new view helpful? It cannot be if there is no context.

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