tommy271
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Euro FinMins Meet, ECB Intervenes
French and German FinMins Francois Baroin and Wolfgang Schauble are meeting on Tuesday to discuss the implementation of the ...long-term plans by Merkel-Sarkozy, which disappointed everyone –even their voters- by their indecisiveness.
Formally, the agenda includes the decisions of EU Summit on July 21 and the medium- and long-term approximation of European economy.
However, unofficially they would focus on how to convince capital markets that the Eurozone could address recession and monetary turmoil, and how to support the European banking system, which is under severe pressure, after FED decided to raise the issue of European banks’ liquidity.
It is said that the reason for the decision was the fact that a large –probably French- bank needed $500 million and no other bank was willing to lend it. Thus, a process of “conciliation” launched, with no one knowing its ending.
However, it is certain that it has caused a “freeze” in the international banking system, which reminiscent the period of 2008-2009.
As expected, the ECB has entered the game, proceeding with emergency measures to provide liquidity and using euro-dollar exchange tools, agreed with the FED a year ago. But, the problem still exists: European banks are still in the centre of attention.
According to Basil III treaty, they would require about €700 billion in extra funds, if the new capital adequacy rules are applied.
Currently, the ECB provides liquidity and removes it with auctions. This is why the euro maintains a high exchange rate.
But, for how long? This question is becoming more intense day by day, since the debt crisis is spreading and the recession deepens.
Under these circumstances, the developments regarding the Greek debt and the domestic banking system are drops in the ocean, however they still threaten to pour fuel to the fir e.
(capital.gr)
French and German FinMins Francois Baroin and Wolfgang Schauble are meeting on Tuesday to discuss the implementation of the ...long-term plans by Merkel-Sarkozy, which disappointed everyone –even their voters- by their indecisiveness.
Formally, the agenda includes the decisions of EU Summit on July 21 and the medium- and long-term approximation of European economy.
However, unofficially they would focus on how to convince capital markets that the Eurozone could address recession and monetary turmoil, and how to support the European banking system, which is under severe pressure, after FED decided to raise the issue of European banks’ liquidity.
It is said that the reason for the decision was the fact that a large –probably French- bank needed $500 million and no other bank was willing to lend it. Thus, a process of “conciliation” launched, with no one knowing its ending.
However, it is certain that it has caused a “freeze” in the international banking system, which reminiscent the period of 2008-2009.
As expected, the ECB has entered the game, proceeding with emergency measures to provide liquidity and using euro-dollar exchange tools, agreed with the FED a year ago. But, the problem still exists: European banks are still in the centre of attention.
According to Basil III treaty, they would require about €700 billion in extra funds, if the new capital adequacy rules are applied.
Currently, the ECB provides liquidity and removes it with auctions. This is why the euro maintains a high exchange rate.
But, for how long? This question is becoming more intense day by day, since the debt crisis is spreading and the recession deepens.
Under these circumstances, the developments regarding the Greek debt and the domestic banking system are drops in the ocean, however they still threaten to pour fuel to the fir e.
(capital.gr)
