European Central Bank demands action as debt crisis is 'systemic'
EUROPEAN Central Bank boss Jean-Claude Trichet today called for "decisive" action to tackle the eurozone debt crisis.
He warned it is "systemic" and risks are increasing sharply.
Trichet, who also heads the European Systemic Risk Board, told the European Parliament's economic and monetary affairs committee: "Over the past three weeks, the situation has been demanding."
Trichet called for a clear decision on recapitalising banks. Commercial banks have become increasingly wary of lending to each other, often turning to the ECB for funding and deposits.
The leaders of Germany and France gave investors hope on Sunday night by promising a plan to recapitalise Europe's banks soon.
But investors remain cautious because of the lack of detail about the plan, and the risk that a solution may be derailed. Trichet said: "The interconnectedness in the EU has led to a rapidly rising risk of significant contagion. It threatens financial stability in the EU as a whole."
