The European Central Bank moved today to allay fears of a crisis in German banking. The head of the bank's supervision committee Edgar Meister told a hastily arranged press conference that talk of a crisis was overdone. The press conference was called to launch a report on banking stability in the EU. However, it took place as reports emerged that top German bankers had met Chancellor Schroder to seek a government backed bank of last resort to take on the bad debts of commercial banks.
Mr Meister, who also sits on the board of the Bundesbank, said he was not aware of any plans to set up a so-called "bad bank". He admitted that 2002 had been a bad year for German banks but insisted that they did not need such a plan. He said that neither the stability of the banking system nor bank liquidity was in question. //www.fxcentre.com