Emerging economies are driving a global economic recovery, the head of the ECB has said after central bankers concluded that the world economy was moving towards “normalisation”.
“At a global level… there is a confirmation of the progressive normalisation of the economy,” European Central Bank (ECB) president Jean-Claude Trichet said on behalf of the central bank chiefs on Monday.
During their first quarterly meeting of the year at the influential Bank for International Settlements (BIS), the central bankers confirmed a global economic recovery was under way.
“We are in the recovery mode, that is something that is very much due to the emerging economies,” Trichet said.
Those economies had “demonstrated resilience”, and were “very, very clearly in a more dynamic mode now”, the ECB chief told journalists.
However, Trichet warned that commercial banks must ensure that they clean up their balance sheets in the wake of the financial crisis to ensure a steady recovery.
“We are telling our banks that they have to do themselves everything to reinforce their balance sheet by all appropriate means,” he said.
The central bankers met the heads of the several major commercial banks at the BIS over the weekend to underline the need for a sound financial system to prop up long term growth.
They said afterwards that they hoped new international standards aimed at bolstering the banking industry’s ability to weather future financial crises would be finalised by the end of this year.
“Timely completion of the Basel Committee reform program is critical to achieving a more resilient banking system that can support sound economic growth over the long term,” Trichet said in a statement released by the BIS.
Leading central bankers and national regulators in the Basel Committee on Banking Supervision said last month they were aiming to strengthen financial requirements on banks by the end of 2012, once their proposals were refined and tested this year.
The reforms, which have been in the offing for several months, are part of the international response to the crisis triggered by the collapse in financial markets and several major banks over the past two years, which plunged the world into recession.
The head of the Financial Stability Board, Italian central bank chief Mario Draghi, on Saturday warned that the financial system still remained very fragile despite a clear improvement.