MOSCOW: Chinese investors will not buy into bonds issued by debt-ridden euro zone countries until their fundamental problems are solved, a senior official with China's $480 billion sovereign wealth fund said on Tuesday.
Jin Liqun, chairman of the supervisory board of the China Investment Corporation (CIC), said it is unlikely that the debt problems bedevilling euro zone countries will be solved until Europe is in super-critical situation.
"There will be no solution, until there is no way out," Jin told Reuters in an interview.
Jin said China backs the European Central Bank's plans for unlimited bond purchases to aid debt-strapped euro zone states, but stated that in itself this would not be enough and the time it bought should be devoted to crucial reforms,
"The ECB is going in the right direction, with the support, most importantly of the Germans, which is crucial," Jin, a former finance vice-minister, said on the sidelines of the VTB Capital investment conference in Moscow.
"But whether this is a momentary solution or a permanent solution - it does not depend on the ECB policy in and of itself."
Urgent reforms in the "peripheral" countries of the euro zone, which are shouldering the heaviest debt burden, must take place.
"We have monetary policy hijacked by fiscal policy, which in turn is hijacked by the social programmes - unless you solve the fundamental problems, this kind of ECB policy will not work forever."
NO INVESTMENT WITHOUT REFORMS
The mass demonstrations in Greece and in Spain against fiscal tightening do not bode well for attracting investment into their debt, Jin said.
"European countries, the people in Greece, in Spain, will need discipline. They should understand this is their only way out of their debt problems," he said. "It's not realistic to expect any Chinese investor, CIC included, to buy the bonds, which are not safe."
indiatimes.com
Jin Liqun, chairman of the supervisory board of the China Investment Corporation (CIC), said it is unlikely that the debt problems bedevilling euro zone countries will be solved until Europe is in super-critical situation.
"There will be no solution, until there is no way out," Jin told Reuters in an interview.
Jin said China backs the European Central Bank's plans for unlimited bond purchases to aid debt-strapped euro zone states, but stated that in itself this would not be enough and the time it bought should be devoted to crucial reforms,
"The ECB is going in the right direction, with the support, most importantly of the Germans, which is crucial," Jin, a former finance vice-minister, said on the sidelines of the VTB Capital investment conference in Moscow.
"But whether this is a momentary solution or a permanent solution - it does not depend on the ECB policy in and of itself."
Urgent reforms in the "peripheral" countries of the euro zone, which are shouldering the heaviest debt burden, must take place.
"We have monetary policy hijacked by fiscal policy, which in turn is hijacked by the social programmes - unless you solve the fundamental problems, this kind of ECB policy will not work forever."
NO INVESTMENT WITHOUT REFORMS
The mass demonstrations in Greece and in Spain against fiscal tightening do not bode well for attracting investment into their debt, Jin said.
"European countries, the people in Greece, in Spain, will need discipline. They should understand this is their only way out of their debt problems," he said. "It's not realistic to expect any Chinese investor, CIC included, to buy the bonds, which are not safe."
indiatimes.com
No comments:
Post a Comment