The Ecofin Council has finally reached an agreement on a general approach to a Single Resolution Mechanism (SRM) with the creation of a single decision body named the Single Resolution Board (SRB) and a Single Fund for the resolution of banks (SRF). The adoption of an SRM is a necessary element for the euro area […]
The Cypriot parliament’s overwhelming rejection of the proposed levy on bank deposits has piled confusion upon uncertainty. In this note, we have looked back at the origins of the crisis, explored the kind of options left open to the authorities and pinpointed some of the consequences for investors. Origins of the crisis The attractiveness of […]
As expected, yesterday’s press conference did not bring any surprising announcements, but it was the occasion to confirm that the ECB definitely does not feel that the crisis is resolved. Decisive action is needed from governments, first of all on banking union next week. Nevertheless, yesterday’s speech has tended to reinforce our expectations of seeing […]
The Troika has finally reached an agreement regarding Greece. A second debt restructuring was almost necessary in order to bring Greece back on a sustainable debt path. However, due to the particularity of the euro area a haircut of principal was not an option. Two-thirds of the Greek public debt are currently detained by public […]
Yesterday’s press conference held in Slovenia did not add much new information. It was mostly an occasion for Mario Draghi to clarify some aspects of the Outright Monetary Transactions (OMT) programme. It confirmed that the ECB has entered a wait-and-see mode that could unnerve financial markets if the Spanish government does not soon take the […]
Several hurdles were removed on 12 September 2012 The German Constitutional Courtruling cleared the way for the launch of the European Stability Mechanism (ESM). Dutch parliamentary elections did away with the risk of a eurosceptic government in a core country. The European Commission ambitious proposal for bank regulation provides a road map towards a banking […]
Mario Draghi has finally delivered what was very close to investors’ expectations. In announcing the Outright Monetary Transactions (OMTs), the ECB will put up its almost unlimited balance sheet to serve as a backstop in this crisis. The main key word in yesterday’s announcement was “unlimited”. The key points of the ECB’s announcement are the […]
ECB’s Nowotny’s comments about giving the ESM a banking licence have boosted the market. However, such a solution appears impracticable within the current legal framework as it will violate Art. 123, one of the cornerstones of the construction of the EMU. One way of circumventing the ban imposed by Art. 123 would be to split […]
The July 2012 issue of Perspectives is now available for reading and downloading. Today we preview the macroeconomics section of the magazine. Over the past twelve months or so, we have regularly referred in this publication to the phenomenon we have dubbed the ‘Great Divergence’. We define this as the increasingly divergent trajectories being taken […]
Spain’s government has finally decided over the week-end to seek international assistance. The precise amount of the loan has yet to be determined but could be up to €100 billion. The following 6 points summarize how the Spanish government will accept EU assistance. 1. The Spanish government has finally decided to seek international aid to address […]
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