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ECB: Financial Stability Review suggests alleviation of financial market tensions, challenges remain
Stress indicators and euro area fundamentals suggest an alleviation of financial market tensions, especially on the banks' funding side. However, financial stability conditions remain fragile and the euro area adjustment process is incomplete.
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ECB/Asmussen: Europe 2014 – an outlook from the ECB
Asmussen argued that the changes taking place in the euro area today would ensure that a different path was taken from that of Japan – although it would take perseverance to ensure that a "lost decade" was definitively avoided.
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Merkel: "Germany is ready to develop the EU treaties further"
Merkel said that treaty change was needed to create a sense of responsibility among Member States to implement necessary changes. Eurogroup chief Dijsselbloem stressed that France's crisis measures in particular were still "not enough".
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Bundesbank/Weidmann: What can monetary policy do?
Weidmann said that to minimise the risks posed by the crisis measures to the euro area operational framework, the monetary policy mandate must be interpreted as narrowly as possible, reducing the danger of suspicions of fiscal or financial dominance.
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Bundesbank/Weidmann: Europe's Monetary Union - Making it prosperous and resilient
Weidmann argued that to disentangle the euro area's fiscal and financial conundrums, the sovereign bank doom loop had to be broken and walls erected between banks and sovereigns.
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Bundesbank/Dombret: How to overcome fragmentation in the European financial market
Dombret made four main points on fragmentation: diagnosis requires normative judgement; it reflects structural differences and is not bad per se; Banking Union will help financial market integration; and differences or fragmentation in the real economy may also be justified.
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EFSF issues €1.5 billion 16-year bond
EFSF placed a €1.5 billion 16-year bond maturing on 3 December, 2029. The issuance spread was fixed at mid swap plus 29 basis points. This implies a reoffer yield for investors of 2.758 per cent.
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Germany's FCC won't rule this year on ECB bond-buying programme
Germany's top court will not rule before 2014 on lawsuits challenging the ECB's plan to buy bonds of crisis countries. Several suits are targeting the central bank's OMT programme, arguing it oversteps the ECB's mandate to conduct monetary policy.
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Reuters: Eurozone mulls cheap loans as incentive for economic reforms - document
Eurozone states are considering cheap loans to member governments as an incentive to carry out painful economic reforms, an EU document showed, introducing a discussion on fiscal transfers.
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NYT: IMF shifts its approach to bailouts
The IMF is pushing hard for a plan that would impose upfront losses on bondholders the next time a country in the euro area requests a bailout. But the proposal is encountering stiff resistance, with Germany leading the opposition. (Includes link to Expert Group report.)
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Bruegel/O'Neill & Terzi: Addressing competitiveness or financial fragmentation? – A false dilemma
The weakness of the banking sector and the worsening of firm credit availability are likely to be addressed better by a well-designed and fully effective Banking Union than by country-level structural reforms.
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IMF Working Paper: Debt Reduction, Fiscal Adjustment, and Growth in Credit-Constrained Economies
This paper shows that gradual and adequately balanced fiscal adjustments may be more appropriate to spur medium-term economic growth than deficit reductions driven by spending cuts in the context of financial constraints.
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ECON Committee: Candidate for boss of EU bank supervisor quizzed by MEPs
Danièle Nouy, the ECB's nominee for the new post of EU bank supervisor, was quizzed about her views on banks' exposure to sovereign debt, the accountability of the future supervisor, and the need to develop all the pillars of Banking Union.
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ECB/Draghi: Opening speech at the European Banking Congress "The future of Europe"
"Once the SSM is established, it offers a real possibility to take a new, European approach towards governance of the financial sector – and hence to reverse the harmful financial fragmentation we have seen during the crisis."
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EP President Schulz: Europe's path out of the crisis
Schulz addressed i.a. the need for an effective SRM under the authority of the Commission, and criticised those who have been calling for national resolution funds.
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Bundesbank/Lautenschläger: The stress tests will be strict
In an interview with Handelsblatt, Lautenschläger highlighted the importance of rigorous stress tests and warned that she expected some banks to lie below the required core capital ratio.
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Bruegel/Wolff: Europe rightly pursues the road to a Single Resolution Mechanism
A purely national solution would severely undermine financial stability and lower growth, writes Wolff.
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CEPS: The new European framework for managing bank crises
This Policy Brief describes and discusses the proposals for a European SRM for banks and for a Directive on Bank Recovery and Resolution. It makes a number of key recommendations.
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