The problems that have occurred in the United States cannot be linked individually to what is happening at Credit Suisse. Mujagic can imagine that the comparison with the 2008 financial crisis is necessary, but “the situation is different in a number of crucial areas”. According to Mujagic, there is an essential distinction between the 2008 solvency problem and a liquidity problem.
The liquidity problem explained: ‘Suppose you are penniless now and you are guaranteed €100,000 on 1 September, but before that time you have to pay a €50,000 bill. This is a liquidity problem, it is a problem that can be solved very easily.’ That is to say by advancing that money to the Central Bank. “This is what we are dealing with now.”
“A liquidity problem is a very easy problem to solve”
In short: a much smaller problem than the one central banks faced in 2008. “The dilemma you would immediately think of, that the bank must choose between price stability and bank health, is not yet a real problem. ”
Inflation is still high, according to Mujagic, while unemployment is not yet rising, so we are facing “practically the same situation as a week or a month ago. You have to keep raising interest rates.’ With which the ECB has the wind in its sails: the bank raised interest rates by 50 basis points in March in recent months. And the benefit of this is? That the market has already evaluated it.
Mujagic can well imagine that the ECB president will announce today that interest rates will rise because inflation is still too high, but that does not mean that interest rates will continue to rise in the coming months. Much will depend on the ECB’s March estimates of what our economists think inflation and economic growth will do.