Reuters: US Dollar Report: UPDATE 1-Not time yet for new slug of ECB cash - Monti

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UPDATE 1-Not time yet for new slug of ECB cash - Monti Jul 23rd 2012, 17:01 Mon Jul 23, 2012 1:01pm EDT By Alexei Anishchuk SOCHI, Russia, July 23 (Reuters) - Italian Prime Minister Mario Monti on Monday played down the need for a new European Central Bank injection of funds into the euro zone's banking system, while Vladimir Putin said Russia's central bank would not dump its euro holdings. "Yes, of course, it would be helpful but I don't think there are any grounds that would ... favour an immediate injection of funds," Monti told a joint news conference with the Russian president in the Black Sea resort of Sochi, in response to a question about whether the ECB should pump more cash into Europe's banks. The Russian president urged euro zone leaders to get a grip on the debt crisis which, he said, was dragging Europe back into recession. The ECB injected one trillion euros of cheap three-year liquidity into the European banking system in December as the euro zone faced a credit crunch, bringing some respite from the continent's banking and debt crisis. Weaker euro zone nations are now back on the ropes with Spanish borrowing costs above 7 percent and some Spanish regions saying they will need central government financial assistance. A spike in Spanish borrowing costs on Monday to 7.5 percent also pushed up Italian yields in their wake as Italy's finances are also coming under market scrutiny. Monti told journalists at Putin's summer retreat that he did not think it was viable to call another regional crisis summit, adding that it would be for EU Council President Herman Van Rompuy to decide on whether to call one. Putin said euro zone countries needed to implement structural reform to solve the debt crisis. "Markets do not react only to the amount of money spent to treat crisis symptoms," said Putin, "but also to the choice and quality of structural measures ... to consolidate the budgets of euro zone countries. "The bigger the gap between the amount of money that is pumped in and the minimum structural measures (that are taken), the greater the speculative operations will be." As global financial markets suffered sharp selling on Monday on concerns that Spain might need a full-blown bailout, Russian assets - vulnerable to risk sentiment and volatility in the oil price - suffered their heaviest falls since May. Putin, however, said that Russia, which holds 40 percent of its large foreign-exchange reserves in euros, would not take any unilateral action that would complicate efforts to manage the euro zone debt crisis. "We will not reduce this level," Putin said. "We won't change anything - we believe in the fundamental potential of the European economy and will support the efforts of our partners to stabilise the situation." Russia's gold and forex reserves, the world's fourth-largest, total just over half a trillion dollars. Link this Share this Digg this Email Reprints

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