European Central Bank chief Mario Draghi has sought to calm fears about the health of European banks after a “sharp fall” in their share prices, BBC News reports.
European banking stocks have lost almost a quarter of their value since the start of the year. But Draghi said banks were now better protected from a collapse than before the financial crisis.
Individual banks and the financial system as a whole are more resilient, he told European Parliament members.
His comments come as stocks including Deutsche Bank and Societe Generale fluctuated wildly last week. “The sharp fall in bank equity prices reflected the sector’s higher sensitivity to a weaker-than-expected economic outlook,” Draghi said.
Investors were also worried that banks would be hit by low commodity prices, tighter regulations and low interest rates, he said.
However, Draghi said banks had better “capital buffers” than they did during the eurozone banking crisis four years ago. “In the euro area, the situation in the banking sector now is very different from what it was in 2012.”
Speaking in the European Parliament, Draghi also said the ECB was “ready to do its part” to strengthen the wider Eurozone economy: “We will not hesitate to act.”
He hinted at further monetary stimulus next month as the eurozone battled weak investment, sluggish manufacturing growth, geopolitical risks and heightened uncertainty about the health of the global economy.