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STORY: Lagarde told an EU Parliament committee that euro area banks were "resilient, with strong capital and liquidity positions" but said the central bank was ready to step in if necessary.

"Our policy toolkit is fully equipped to provide liquidity support to the euro area financial system, if needed, and to preserve the smooth transmission of monetary policy," she said.

Lagarde welcomed "the swift action and the decisions taken by the Swiss authorities", which orchestrated Credit Suisse's takeover by rival UBS.

"They are instrumental for restoring orderly market conditions and ensuring financial stability," she said.