As the financial crisis in Europe continues to unfold, there has been increasing government pressure on central banks to intervene in the banking sector, according to HSBC global economist Madhur Jha.

She was the guest speakers at HSBC Malta’s latest business breakfast.

“Central banks are under huge political pressure to deliver more in the way of growth. As a result they are having to juggle multiple objectives, for example in the UK there is a focus on flexible inflation targeting whereby slightly higher inflation might be acceptable to achieve implicit growth objectives,” Ms Jha explained.

“However, the long-term negative impacts for this approach must be considered, such as a reversal on the globalisation process and other repercussions such as growing trade restrictions and currency devaluation,” she warned.

“On the bright side, the emerging markets outlook is more positive with relatively low debt levels and strong labour markets. The global growth will be supported by emerging markets such as China,” she said.

During the HSBC Malta event, organised for business delegates in Malta, HSBC’s global economist recommended fiscal union as the ultimate solution for the eurozone.

HSBC Malta’s Chris Bond, head of global banking and markets, offered his insight into recent media headlines about Malta’s banking sector. “Resilient is, in my view, the perfect word to describe Malta’s economy during the global financial crisis,” he said.