French central bank chief hits at Moody’s downgrade

France urges creation of minister for eurozone

HONG KONG, Nov 30, (AFP): The head of France’s central bank on Friday hit out at Moody’s, saying the agency had made a “factual mistake” when it took away the country’s cherished AAA credit rating.

In making its decision, which followed a similar move by Standard & Poor’s earlier in the year, Moody’s cited structural problems with the economy that made it harder to compete globally and warned more cuts could be on the cards.

It said Paris could face fiscal issues in the future and it was exposed to demands for financing from heavilyindebted eurozone partners.

But Noyer, on a visit to Hong Kong, said Moody’s had been “misguided” and that the argument over the country’s exposure to debt-addled European periphery nations such as Greece through trade links was not accurate.

“All kind of reasonings about the exposure to periphery... is outdated and therefore is a factual mistake,” he told reporters on the sidelines of a conference to promote Paris as a European hub for offshore yuan trading.

“I have difficulty to understand the reasonings. I respect opinions of all kinds, we are in a free world but I am not really convinced by the arguments that have been put forward,” Noyer added.

He said France’s exposure to sover- eign debt risk has been “substantially reduced” as the eurozone as a whole has stabilised, while authorities are committed to cutting spending and fiscal consolidation.

“All this means we are able to absorb the economic shocks,” he said.

French President Francois Hollande has sought to reassure financial markets following last week’s downgrade while reaffirming his determination to control public finances and pursue reforms.

Moody’s has stressed that France still has an excellent rating because of its significant credit strengths, a large and diversified economy and the government’s commitment to structural reforms and fiscal consolidation.

The downgrade put France behind Finland, Germany, Luxembourg and the Netherlands, which have retained top AAAratings, although they have all been given a negative outlook from at least one of the three agencies.

French Finance Minister Pierre Moscovici called on Friday for the creation of a “minister” who would “embody” the eurozone and would be accountable to citizens.

Moscovici, speaking at a high-level symposium at the finance ministry, said: “In the medium term, we must embody the eurozone in a minister who must be able, in one way or another, to face up to the sanction of votes by citi- zens.”

Moscovici was quick to explain that his proposal was not for a “super commissioner”.

He said: “The presidency of the Eurogroup (eurozone finance ministers) is a function which must evolve.”

He also said he favoured the creation at the European parliament of a “committee of members elected by citizens in the eurozone” to “play a real role of joint legislator in the drafting of economic policy for the eurozone, in a sort of counterweight to the Eurogroup.”

But he also explained that he did not have in mind the creation of a “parliament for the eurozone.”

Moscovici said: “The current model works badly. It is not suitable. Our citizens do not understand it. It is too far away from the mechanisms of national control.”

Moscovici called for “the strengthening of democratic control of decisions taken for the eurozone.”

Moscovici said: “We need more solidarity to reduce the heterogeneous nature of the eurozone.

He argued: “The European crisis is first and foremost a crisis of integration. It is not the crisis...of an excess of Europe. I say this to all those who dream of a departure, of a weakening.”

He said: “It is a crisis of a lack of Europe.”