Financial market turmoil will end only after the full disclosure of all losses by financial institutions and their recapitalization, European Economic and Monetary Affairs Commissioner Joaquin Almunia said on Monday.
In a prepared speech for the Economic and Social Council of the United Nations, Almunia said that in the medium-term, however, authorities also needed to address the weaknesses in the financial system at a fundamental level. “It is essential that investor uncertainty about credit losses be removed. In the short term, investor confidence can only be restored by full disclosure of all losses by financial institutions and adequate recapitalization,” Almunia said.
His remarks echo the weekend statement of the financial leaders of the Group of Seven industrialized nations – United States, Canada, Japan, France, Britain, Italy and Germany. Almunia also said that while each country had the right to tailor its policy response to its own specific situation, it would be a mistake to go it alone because financial markets were global and appreciated coordinated action. (Reuters)