Paris (Reuters) -the French banking system is well capitalized and is not the current risk of risk, Christine Lagarde, president of the European Central Bank (ECB) said on Monday.

“I think that the French banking system is a system that is well capitalized, that it is much better than it was during the last major financial crisis, that it is well structured, well supervised, with responsible actors,” she said on Radio Classique.

French banks were recently heckled on the stock market after the Prime Minister’s decision, François Bayrou, to engage on September 8 the responsibility of his government before the National Assembly on the question of the fight against the country’s debt.

“I do not think that the banking system, in itself, is in any way the source of current risk but the markets, in all circumstances of this nature, assess the risk,” explained Christine Lagarde.

The president of the ECB, however, was worried about the French political situation.

“The risks of falling government in all countries in the euro zone are concern,” she said.

“And what I have been able to observe for six years now that I have been president of the European Central Bank is that political developments, the occurrence of political risks, have an obvious impact on the economy, on the assessment by the financial markets of the country risk and therefore are concern for us, whatever they are,” she added.

The yield of French sovereign bonds at ten years has reached its highest level last week since March and is currently displayed around 3.52%.

Christine Lagarde also warned of the risk of a loss of independence from central banks while the American president, Donald Trump, wishes to dismiss Lisa Cook, a governor of the American Federal Reserve (Fed) and continues to put pressure for Jerome Powell, the president of the Fed, resigned.

“If (Donald Trump) was happening there, I think it is a very serious danger for the American economy and for the global economy, because American monetary policy obviously has effects on the United States to maintain prices stability and to ensure optimal employment in this territory.”

“If it was no longer independent (…) and if it depended on the diktat of this or that, then I believe that the balance of the American economy and consequently, the effects it has in the whole world, because it is the biggest economy in the world, would be very worrying,” she added.

(Written by Claude Chendjou, edited by Bertrand Boucey and Kate Entringer)

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