April 27 - The ECB has reduced the likelihood of a credit crunch in Europe but fundamental problems remain, while banks must continue lending to the ''real economy'', says EBRD President Thomas Mirow.
You don't does not have -- economic or political problems to -- not just in the eurozone but also in central and Eastern Europe for the European Bank for Reconstruction and Development is an influential player out here to discuss those issues. I'm joined by EBRD president Thomas middle. Missed the -- before we get to those challenges and issues you're standing for re election. Are you confident you have the support and the backing to be be elected. I said that would be available. In the presence in the selection places that would be based on openness. Transparency. And merit. And as long as this is the case I'm happy to welcome -- and crucially -- do you feel you have the backing of France and Germany. I do hope that. In this case I would have sufficient backing from him and. Okay on to Europe from how does that political instability that when I'm seeing in court you know. The Netherlands and France on top of the economic problems how does not spreading to the white appointment. This is an issue of -- how could you imagine that. A financial and economic crisis of that that. Would not have a political impact. And it reminds us that. You have to do things. At the time you have to address problems and technical way. And at the same time continued to. Get the political so pool but the way -- organs. But it appears that it's many of these poems aren't being addressed the town is being to coin the phrase -- on the rules. I'm not a sure -- many problems all addressed. Be it in monetary terms viewed by and through the fiscal compact. But but this crisis is looking. It is not even went on so co host who did work. And I video these. These are comprehensive. Political mechanisms. And you cannot expect them to stop working from Wednesday to the other. How is the risk of you goes on banks. Cutting the credit lines and loans to central and Eastern Europe because that risk diminished. Entirely with the European central banks -- -- I would say it has been reduced that risk that it has not diminished. In in in fundamental problems because. We certainly will see. And continuing Africans who do you leverage to shrink balance sheets. So. There will move. The need for further -- foods. To preserve the cross border banking model in Europe which has especially served sentiments and you very well. You said last week in Washington. On the subject of deleveraging and shrinking bank balance sheets. You said that as you said there this will have to continue but what should the banks be doing and what should we be avoiding. In terms of the leverage. I think what they should avoid is to reduce. The support and be lending to the real economy to. Small and medium sized businesses for instance. And -- sell assets. It would have been bold on the most speculative things. About lending doesn't appear to be getting through it do you economy whether it be in the news -- autumn across the continent. Well it differs from country to country and certainly down. Scarcity is of credits and in some halls of the reaction. But we didn't see currently. A true credit crunch. You also sense that that is still capital available in the private market where does that count the well if you look for instance of the way UniCredit. Has increased its capital it had to pay a high price for it booked on the they managed to do it. Again it's not getting through that doesn't compute -- and Dubuque on me. Well Cristobal you need healthy banks and as soon as they are hoping they will be able to take risks again. Higher degree than they -- and we will.