Greek Finance Minister Evangelos Venizelos said yesterday that a deal on write downs for private bondholders under the second Greek bailout is close. Negotiations on the €130bn bailout itself will restart on 16 January with the IMF and the EU, although Venizelos stressed Greece must step up the pace of its structural reforms before then. Separately, the latest IMF report on Ireland warned that the eurozone crisis could hamper demand for Irish exports and cut in half its estimates for Irish growth next year. Separately, European Council President Herman Van Rompuy announced that the next EU summit will be held on 30 January. Die Welt reports that the dispute between the German government and the Bundesbank over Germany’s €45bn bilateral loans to the IMF has deepened, as the Bundesbank has rejected the government’s argument that it is sufficient that the German Parliament’s Budgetary Committee has “taken note” of the measures, with a source claiming that "the Bundesbank continues to expect that the Bundestag bears shared responsibility for expanded contribution to the IMF.” FT Deutschland’s Financial Editor Lucas Zeise argues that the re-introduction of Germany’s bank bailout fund Soffin and others “indicates that our governments are preparing for a sovereign default and a Greek exit from the currency union – probably already in the first quarter [of 2012].” Meanwhile, writing in the Guardian, Lib Dem Business Secretary Vince Cable argues, “The scale of British-based banks (with balance sheets valued around 500% of GDP) and the risk they pose to the UK taxpayer has meant that Britain has had to act ahead of other countries” noting that, in some cases, the UK is taking “tougher action than either the EU or the US.”Open Europe Europe
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Wednesday, 21 December 2011
Huge demand for new ECB long-term bank lending;
Dispute between German government and Bundesbank over loans to IMF deepens
The ECB this morning launched its first three-year lending operation with 523 banks requesting €489bn in loans, well above the expectations of between €250bn and €350bn. The previous largest amount requested was €442bn in one year loans back in June 2009. The aim of the long term lending operation is to provide secure long term financing for banks which can no longer gain funds from the usual avenues, in turn hopefully boosting lending in the wider economy and possibly purchases of sovereign debt. It was widely expected that demand above €400bn would prompt a positive market response. Open Europe’s briefing on the role of the ECB and the potential consequences for its long-term lending featured in the Telegraph, on EUobserver and on Zerohedge. The FT reports that US money market funds, formerly a key source of funding for European banks, have now cut their European exposure to record lows.
The chairman of France’s financial markets watchdog AMF, Jean-Pierre Jouyet, yesterday said that it would take “a miracle” for France to maintain its Triple-A credit rating, although he still considered it possible, reportsLa Tribune. Le Figaro notes that, according to the French Treasury Agency (AFT), France will have to borrow €178bn next year. According to a new OpinionWay-Fiducial poll published by Les Echos, 68% of French would consider the loss of the Triple-A as a “failure” for French President Nicolas Sarkozy.
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Bank of England claims EU financial regulation could stop it tackling systemic risk
The Telegraph reports that the Bank of England’s Financial Policy Committee has criticised the EU’s approach to financial regulation, warning, “Maximum harmonisation of regulatory standards restricts the discretion for national authorities to tighten regulatory levers to guard against systemic risk. The main rationale for establishing common minimum standards is to avoid a ‘race to the bottom’ in international regulatory rules. The rationale for maximum standards is not clear.”
He criticises the European Commission’s proposed Financial Transactions Tax, arguing, “On the EU side, a technically challenging proposal has been wrapped in almost spiritual clothing…But it is in reality a cynical raid on UK financial services – or, more likely, the consumers of them – to fund the EU budget. A perverse Robin Hood tax levied on the people of Nottingham to pay King John.”
Die Welt Editor: Britain’s loneliness “a bad sign for Europe”
In today’s Die Welt, Editor Michael Stürmer writes, “The loneliness of the British is a bad sign for Europe. The liberal economic forces lose ground vis-à-vis EU-statists. This changes all the equations within the EU, strengthens the development of the Franco-German directorate and weakens the influence of the smaller member states. Germany will become overwhelmed in its role of the irreplaceable yet reluctant hegemon.”
The FT reports that new EU rules on over-the-counter derivatives are set to be delayed after member states and MEPs have failed to reach a compromise over a final text for the proposed European Markets Infrastructure Regulation (EMIR).
AFP reports that in Salvaterra de Miño, a small village in Spain’s Galicia region, a large majority of shopkeepers will accept payments in pesetas until the end of the year. Meanwhile, Spain’s new Prime Minister Mariano Rajoy has taken oath this morning and is expected to unveil the list of ministers later today, reports El Mundo.
The former chairman of the Federation of German Industries Hans-Olaf Henkel – a well-known critic of the euro – has joined the ‘Free Voters’ political platform, which will run in the 2013 German national elections. A comment piece in FT Deutschland notes that “with Henkel, all those voters who are critical of eurozone bailouts can have a political voice.”
An article in the Telegraph reports that, under the European Commission’s proposed review of EU public procurement rules, British companies convicted of bribery could become eligible to secure public contracts across Europe, if they can prove that they have paid reparations for the damages caused by their misconduct.
A new OpinionWay-Fiducial poll on next year’s French presidential elections published by Les Echoscredits Socialist candidate François Hollande with 27% of vote intentions, followed by French President Nicolas Sarkozy at 24% and the leader of far-right Front National, Marine Le Pen, at 16%.
Handelsblatt reports that EU member states, MEPs and the European Commission agreed yesterday to introduce an obligatory 22 digit reference number (IBAN number) for bank accounts from February 2014 in an effort to harmonise EU-wide bank transfers and reduce processing costs for banks and consumers.
The WSJ reports that the EU and IMF are pressing Hungary to postpone action on its proposed central bank laws due to fears that the new rules could compromise the bank’s independence.
Bild reports that the European Commission is planning to introduce an EU-wide requirement that nurses and midwives must have completed 12 years of schooling, which in Germany would mean potential nurses and midwives having to sit the equivalent of A-levels, rather than entering the profession directly as many currently do.
EUobserver reports that four Chinese airlines are to legally challenge the EU’s plans to include all planes flying into and out of European airports in its Emissions Trading Scheme from 1 January 2012.
Moody’s last night warned that although the UK’s Triple-A credit rating was “stable”, it faced “formidable and rising challenges” due to weak economic growth and the threat of shocks resulting from the eurozone debt crisis.
The Telegraph reports that Justice Secretary Ken Clarke is working on a joint proposal with the Swiss government that would establish a “filter mechanism” for cases sent to the European Court of Human Rights in Strasbourg, in an effort to ensure that the Court only deals with major breaches of human rights and not “trivial” personal claims.
Sarkozy’s outbursts reveal insecurity: Pressure of upcoming election begins to show
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