Eurozone Developments For EFSF-ECB Solution
The shadow of contagion of the debt crisis to neighbouring Italy, and the overall consequences in Eurozone dominated discussions of politicians (including Greek FinMin) and bankers over the weekend in the U.S.
Meanwhile, Berlin still insists on a solution to isolate the effects of a Greek default within the Euro Area.
A sentiment of impasse reigned at the informal meetings on the sidelines of the annual conference of the IMF and the World Bank, as European policy makers, mainly Germans, denied persistently what bankers, the U.S., Japan and BRICS required: to allow the EFSF and the European Central Bank to fill the holes of European banks and the European states that face a possible default.
Regarding Greece, the picture remains blur.
Several scenarios go around based on proposals that have been asked by Troika services to prepare.
The proposal of an upcoming default dominates scenarios, along with the lack of ring-fencing system to isolate the consequences of such a development.
The deteriorating course of Italy is now changing the issue, as the sole addressing of Greek problem will not be sufficient.
The only institutions that could deal with a problem of this magnitude are the EFSF and the ECB, and the unlimited funding of banks and economies under threat without any need for collaterals.
Both the IMF and the U.S. press on this direction.
Thus, the solution of disbursement of the sixth instalment to Greece (gradually or entirely) gains ground, in order to gain time for interventions on an orderly default.
Nevertheless, the legal framework is still deficient to provide such a development.
The decisions of the new conditions of the economic governance are expected in October, which should be approved by the EU, but for now, everything seems volatile.
European banks’ executives commented in Washington that the markets’ reaction this week to the indecisiveness of politicians might force them into drastic decisions before the Eurogroup meeting in early October.
(capital.gr)