ECB has bright idea for targeted bank-bashing

November 26, 2015

Imposing a staggered penalty on banks that hoard cash is one of many ways to ease policy being discussed by the European Central Bank. Such levies have drawbacks. But at least a split-level charge would encourage the biggest hoarders to boost cross-border lending.

German open-door isolationism is unsustainable

November 26, 2015

Angela Merkel has ignored domestic calls to shut out refugees. But she will find it harder to brush off French calls for the same. Alienating a key ally would undermine the union Merkel wants to save, and threaten economic integration.

Investors get too comfy over US-euro divergence

November 19, 2015

Twin the prospect of higher U.S. policy rates with the chance of more euro zone easing and the result is eye-catching divergences in currency and interest rate markets. The problem is, such price trends are vulnerable to setbacks even if rate-setters do what’s expected of them.

France can afford budget-busting security spend

November 17, 2015

Prime Minister Manuel Valls says the deficit is bound to miss EU targets as security spending rises after the Paris attacks. Brussels is unlikely to kick up a fuss over this exceptional overspending. Nor will investors, who are used to serial French fiscal slippage.

Portugal’s ropey bank rescue comes home to roost

November 16, 2015

The “good bank” part of bust lender BES needs another 1.4 bln euros, EU regulators say. If it ends up being sold cheaply, fellow banks that part-financed its rescue could suffer. Had Lisbon taken a tougher line with senior creditors last year, it would be in less of a mess.

Portugal dangles between stasis and crisis

November 9, 2015

A group of left-wing parties could replace Portugal’s minority government after a key vote on Nov. 10. This communist-backed coalition could repeal reforms and make the country ineligible for ECB bond-buying. Or it may prove weak, in which case a damaging stalemate could follow.

Dixon: Tsipras’ biggest stress tests yet to come

By Hugo Dixon
November 2, 2015

A central bank verdict that the top Greek lenders must raise only 14.4 billion euros is welcome news for the prime minister. But he has to implement more tough measures before he can secure debt relief from his euro zone creditors. Until then, he faces political risks.

Merkel deserves to survive migrant crisis

October 20, 2015

The German chancellor’s welcome to refugees is backfiring at home. Critics abound in her own party, her popularity is low and right-wing populists are flourishing. Yet Merkel has two things in her favour: the German economy looks solid and her opponents lack a credible leader.

Euro zone rediscovers sloppy fiscal policy

October 15, 2015

Deficits are creeping up in Spain, Italy and even growth star Ireland. Reasons include easy money and pre-election spending. As yet, the gaps aren’t dangerously big. What’s more worrying is poor spending decisions, slowing reforms and fiscal dissonance between member states.

Hugo Dixon: Greek bank recap is race against time

By Hugo Dixon
October 5, 2015

Capital must be injected by year-end to avoid a disastrous bail-in of uninsured depositors. To meet the deadline, Europe’s central bank must finish its stress test and decide how much capital is required. The banks then need time to see if private investors will take part.