Follow Us

Follow us on Twitter  Follow us on LinkedIn
 

14 September 2011

Reuters: EU warned of credit crunch


European finance ministers have been warned of the danger of a renewed credit crunch as a "systemic" crisis in eurozone sovereign debt spills over to banks.

In a report prepared for ministers meeting in Poland on Friday and Saturday, senior EU officials said the 17-nation currency area faces a "risk of a vicious circle between sovereign debt, bank funding and negative growth".

"While tensions in sovereign debt markets have intensified and bank funding risks have increased over the summer, contagion has spread across markets and countries and the crisis has become systemic", the influential Economic and Financial Committee said.

The report highlighted European policymakers' challenge to restore confidence as the leaders of Germany, France and Greece held a crucial conference call on efforts to avert a Greek default that could cause a global financial shock. European Commission President, José Manuel Barroso, told the European Parliament that closer union, particularly in the euro area, was the only way to reverse the negative cycle in financial markets. "Today I want to confirm that the Commission will soon present options for the introduction of eurobonds. Some of these could be implemented within the terms of the current treaty, and others would require treaty change", he said.

Full article



© Reuters


< Next Previous >
Key
 Hover over the blue highlighted text to view the acronym meaning
Hover over these icons for more information



Add new comment