Thursday, 22 September 2011

Open Europe

Europe

IMF: Eurozone crisis could cost European banks between €200bn - €300bn

In its Global Financial Stability Report (GFSR), released yesterday, the IMF warned that the sovereign debt crisis in Europe has reduced the value of European banks’ holdings by between €200bn - €300bn since early 2010. The report called for an urgent recapitalisation of European banks, although stopped short of putting an exact figure on how much this would cost. The conclusions of the GFSR has reignited the dispute between the IMF and eurozone leaders over the state of the Europe’s banks, with Michel Barnier, European Single Market Commissioner, saying, “I would agree with the thrust of the IMF report...I don’t share their assessment on bank capital.”

The European Systemic Risk Board, a new EU body comprising central bankers and supervisors, echoed the IMF’s views, saying, “Supervisors should coordinate efforts to strengthen bank capital,” to head off the “rapidly rising” threats of the eurozone crisis.

Meanwhile, the Greek government unveiled its latest set of austerity measures yesterday, which included increased pension cuts, faster layoffs of state workers and some income tax increases. The proposals will now be voted on by the Greek parliament over the next few days. In response to the measures, two of the largest Greek unions announced they would hold two days of strikes next month. Open Europe’s Raoul Ruparel appeared on US radio station NPRdiscussing the impact of a Greek default.

The ECB announced yesterday that it would be easing its collateral requirements by accepting assets, as collateral in exchange for loans, that are not listed on regulated public markets from the start of 2012. This could pave the way for banks to use billions in asset-backed-securities that were previously unsellable, according to CityAM.

S&P downgrades seven Italian banks;
Italian Foreign Minister: New round of austerity measures a matter of “weeks, if not days”
Standard & Poor’s has downgraded the credit rating of seven Italian banks and put other 15 banks on a negative outlook, reports Il Sole 24 Ore. The decision has triggered a new increase in Italy’s borrowing costs, with the interest on ten-year Italian bonds nearing 6% this morning. Meanwhile, Italian Foreign Minister Franco Frattini said that a new round of austerity measures, including the sale of public property and the privatisation of some public services, will be presented to the Italian parliament in a matter of “weeks, if not days”, reports the WSJ.

Italian news agency ANSA reports that the leader of Italy’s junior coalition party Lega Nord Umberto Bossi has today denied reports that he had agreed with Italian Prime Minister Silvio Berlusconi to discuss the possibility of calling an early election in January.

Bundestag Budget Committee approves EFSF changes
FAZ reports that the Bundestag budget committee yesterday approved the expanded role of the EFSF, the eurozone’s bailout fund, and supported the proposals to give the Bundestag a greater say over the use of the EFSF, however, both issues still need to be approved by the Bundestag as a whole. In an interview with the paper, German Finance Minister Wolfgang Schäuble criticised the German Constitutional Court, saying, it is "absurd" that the Court adheres to "the old regulatory monopoly of nation states dating back to the 19 century", adding "now the challenge is to make our Europe more capable and stronger through limited transfers of competences."

Speaking at a New Direction Debate in Brussels, German Professor Markus Kerber, who challenged the eurozone bailouts at the German Constitutional Court said, "it is crystal clear that with his daily buying of government bonds, [ECB President] Jean-Claude Trichet is overstepping his powers,” adding, "the fact that the European Parliament has applauded Trichet shows that it is completely disoriented from its voters, who are weary of the ECB's actions."

Euractiv reports that negotiations to regulate short-selling in the EU collapsed for the second time this week over fears that legislation would further destabilise the sovereign debt markets in the eurozone.

In the Spectator, Peter Oborne and Frances Weaver argue that, “Very rarely in political history has any faction or movement enjoyed such a complete and crushing victory as the Conservative Eurosceptics. The field is theirs. They were not merely right about the single currency, the greatest economic issue of our age — they were right for the right reasons.”

EUobserver covers a new report by Human Rights Watch, which suggests that the EU border agency, Frontex, has become complicit in the degrading treatment of migrants seized at the Greek-Turkish border, since it has been sending staff and equipment to aid Greece. The report argues that this also makes all other EU member states complicit.

The Spectator has an interview with True Finns leader Timo Soini, which argues that, were he to win the Finnish presidency’s election in January, “the EU will have gained its most Eurosceptical head of state since Vaclav Klaus”.
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UK


The Guardian reports that Deputy Prime Minister Nick Clegg declared in his speech at the Lib-Dem conference yesterday, that the Human Rights Act “is here to stay”. However, this puts him in direct conflict with many Conservative MPs who have been pushing for the Act to be replaced by a British Bill of Rights.

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ECB eases its collateral requirements

Posted by Britannia Radio at 20:33