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'No Time for Complacency' in Europe: Ex-ECB Official
28 Mar 2012 EDT - CNBC.com
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European policymakers have to remain prepared for the worst and cannot afford to be complacent, despite the additional liquidity provided to the banking system, former European Central Bank official Bini Smaghi told CNBC Wednesday.

“In the past, so many times, we thought that the worst of the crisis was over, and then new waves of instability came in. So it’s no time for complacency—we have to prepare for the worst,” said Smaghi, who worked for the ECB during much of the ongoing euro zone crisis.

He warned that the market "will test whether politicians really mean what they said" at some point.

However, those in the markets betting on a euro break-up will be proved wrong, he believes.

"I think markets will understand that betting against the euro is not the right strategy," he said.

Still, the Italian economist, who stepped down from the ECB board last year, said that the single currency could end up as the world’s second reserve currency after the dollar, despite a turbulent year during which many have cast doubt on its future.

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