(Finance) – A lack of agreement between EU countries on the revision of the Stability and Growth Pact “could create more uncertainty which could lead to further increases in yields and spreadsespecially in countries that are unable to keep in line with the rules of the Pact”. This was stated by the vice-president of the ECB, Luis de Guindos in the press conference to present the Financial Stability Report.
As for the decision to Moody’s upgrading the outlook on Italy’s rating to “stable” is a “positive” developmentas well as that on Portugal’s rating improvement, he said.
According to the central banker “even though in the last year we have seen a significant increase in rates” sIn government bonds, the differentials between countries, the spreads “have been rather stable and in the very last stages we have seen a bit of a reduction in the differentials”. “The good news is that the situation in the government bond markets is positive.” But the scenario of no agreement on the revision of the Stability and Growth Pact could create more uncertainty which would be reflected in rates and spreads, you reiterated.
The ECB has the ICC mechanism permanently in its arsenal “if the conditions are there” it can be activated if necessary, he recalled.