Cœuré: The ECB has never been in favour of debt cuts for governments, as doing so can generate contagion to other countries and can undermine the confidence of investors in a long lasting way, and we are talking about countries that need to keep or regain market access. The situation with regard to haircuts for banks is different, however.
As we have seen in recent days and weeks, the exchange rates of many emerging market economies have been impacted negatively by an outflow of capital. This development could well mark the start of a new mutation of the ongoing global crisis.