RIGA - Financial markets in Europe are currently better prepared to cope with various turbulences than they were back in 2008, Bank of Latvia Governor Martins Kazaks said in an interview on TV3 channel Tuesday.
The head of the Latvian central bank indicated that European banks are now properly capitalized and their liquidity is high. Meanwhile, the European Central Bank (ECB) is monitoring the situation and has various tools to stabilize the situation if needed.
"Uncertainty is undeniably very high. Transformations in the economy have been very radical. Inflation is still high, so interest rate hikes are still necessary to curb the inflation. In this situation, some market players have probably made mistakes in their business strategy. But this situation certainly cannot be compared to the situation in 2008, for instance," Kazaks said.
The Bank of Latvia governor noted that the current situation is essentially different to that in 2008, as the supervision of banks has become much stricter and the banks are required to keep additional provisions for crises.
"Obviously, this does not mean that everything will be risk-free in the future - it won't be. But we are better prepared for various turbulences... One really should not think that the year 2008 is at our doors again," Kazaks said.