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LBMA Coverage: Is Europe Wasting A Good Crisis? - Keynote Speaker

By Kitco News
Monday September 30, 2013 4:42 PM

(Kitco News) -The European Central Bank should continue to lower interest rates to help spur growth and help Europe out of its current recession, said Francesco Papadia, chairman of Primary Collateralized Securities and former director general for market operations at the ECB.

Papadia was a keynote speaker at the global London Bullion Market Association/London Platinum Palladium Precious Metals Conference, being held in Rome, and talked to Kitco News’ Daniela Cambone about the state of the European economy.

Papadia said there is a battle ensuing between the ECB and markets. Although the ECB provided forward guidance saying that it will keep rates low or even lower, he said markets continue to price in a rate hike.

“I’m not clear how this tug-of-war will end - who will win. My sense is if the governing council really wants to win this war then it should lower interest rates,” he said. “If they would lower [interest rates] to 25 basis points they would really impress on the market their will.”

During his speech at the LMBA, Papadia talked about whether Europe is in a position to grow and profit from its current crisis.

“Historical experience shows that Europe progresses in crisis,” he said. “The question that I put forward is whether Europe is indeed using this crisis to progress in the economic field, in the monetary and financial field and institutional field.”

To answer his question, Papadia said he likes the direction the euro zone is heading in, but the speed in which it has been progressing is only “sufficient.” He added it is too soon to tell if Europe will benefit from the crisis.

However, Papadia said he is hopeful about the European economy.

“I find it easier to be optimistic now than I did maybe 12 or 18 months ago,” he said.

Looking at the gold market, Papadia, said that the yellow metal continues to be a legitimate reserve asset for central banks and it is more of a question of how much each bank wants to hold in its reserves.

By Neils Christensen of Kitco News nchristensen@kitco.com

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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