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(CEP News) Frankfurt - There is no precedent to this financial turmoil, European Central Bank Governing Council member Miguel Angel Fernandez Ordonez said on Tuesday, adding that the global economy is facing a crisis of "enormous proportion" and will barely recover next year.
Giving testimony before the Spanish Parliament, Ordonez added that emerging economies will also feel the effects of the financial crisis as banking activities slow due to tightening credit access and illiquid assets still on balance sheets. Despite the downside risks to economic growth due to the current market turmoil, Ordonez said inflation risks have not yet disappeared. "And so monetary policy must continue contributing to containing those risks," he said. Regarding the Spanish economy, Ordonez, also the Governor of the Bank of Spain, suggested that growth could turn negative in the second half of 2008 and into 2009. The central banker added that there is no risk to Spanish depositors due to the current rout. By Todd Wailoo,
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