(Reuters) – The European Central Bank (ECB) is ready to guarantee the stability of the financial system and its good liquidity food, said François Villeroy de Galhau, a member of the Council of Governors of the Institution on Wednesday, while the announcement of large American customs duties have been shaking the financial markets for several days.

“The Banque de France (BDF) and the ECB are fully mobilized to ensure the proper financing of the economy and the stability of the financial system. They ensure the good liquidity diet of the financial system including during a market stress period,” he stressed in a letter addressed Wednesday to the President of the Republic and to the Presidents of the National Assembly and the Senate.

The Governor of the BDF said, however, that there was no particular concern about liquidity. “Today, no, but we remain attentive,” he added before the journalists during the presentation of the document.

The order that has reigned for decades on international trade has been upset by American customs duties, including those called “reciprocal” detailed on April 2 by Donald Trump and entered into force this Wednesday, which raises a global economic recession and causes the tumble of world markets.

Four sources have told Reuters that economic growth in the euro zone could go back much more than anticipated by Frankfurt because of the American customs duties much higher than expected.

In its previous projections, the central bank calculated that an increase in American customs duties followed by a European response would amputate by 0.5 percentage point the growth of the euro zone in the first year and would strengthen inflation.

François Villeroy de Galhau, for his part, quantified at 0.25 percentage points the “direct” impact of the trade war on the growth of the euro zone in 2025.

However, he said that the shock would be heterogeneous between countries and sectors according to their degree of exhibition, and relatively lower in France.

In France, the central projection of the BDF remains “that of an exit from inflation without recession, then a gradual recovery of the activity,” he added.

“Goal against his camp”

François Villeroy de Galhau also called for “general mobilization” in the face of the turbulence caused by customs duties, warning that geopolitical tensions revived the risks of increased fragmentation of the international monetary system but were also an opportunity to develop the international role of the European currency.

“From this point of view, what has been going on for eight days has been playing against the role of the dollar. So here it is, is still (…) an example of a goal against his camp,” he said in front of journalists.

In an interview published Wednesday by the newspaper Le Monde, he also pointed out that “there is still a margin of drop in rates” and that “changes since April 2 is in fact in fact for an upcoming decline”.

Olli Rehn, also a member of the Council of Governors of the Institution based in Frankfurt, spoke in the same direction on Wednesday, declaring that the developments that have occurred since March, and in particular since last week, reinforced the arguments in favor of a drop in the rates of the ECB at its monetary policy meeting on April 17.

“Since the March meeting, many risks identified at the time have materialized or are materializing,” he said in a speech published by the Bank of Finland, of which he is the governor.

(Written by Diana Mandiá, edited by Blandine Hénault)

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