French central bank chief hits at Moody's downgrade

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 heavily-indebted 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 is outdated and therefore is a factual mistake," he told reporters on the sidelines of a conference to promote Paris as a European hub for offshore yuan trading.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 sovereign 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 AAA ratings, although they have all been given a negative outlook from at least one of the three agencies.