There is "ample liquidity" in the euro zone to finance higher growth after two recent interest rate cuts by the European Central Bank (ECB), according to Mr Ernst Welteke, ECB governing council member."
"There is ample liquidity, there is enough to finance higher growth rates," Mr Welteke said after a speech to the American Council on Germany.
Mr Welteke, who is also the Bundesbank's president, cautioned that there would be no quick recovery for the global economy even after the end of the war in Iraq.
"We must not be fooled into regarding the war in Iraq as the sole source of uncertainty or as the predominant issue for the world economy," he said, citing what he described as fundamental imbalances in global growth.
"The uncertainties stemming from geopolitical strife deflect our focus from some other fundamental imbalances," he said.
Mr Welteke cited overcapacity worldwide in the technology sector, which was slowly being unwound, as well as worries in capital markets stemming from accounting scandals and other balance-sheet problems. He said removing these imbalances was a prerequisite for growth.
He added that the world was depending too much on the US economy to lead recovery, pointing to the latest International Monetary Fund growth forecasts, which put the US growth rate in 2003 at about twice the rate of euro-zone growth. - (Reuters)
