Financial Regulatory Forum

By Andrew Torchia

LONDON, March 3 (Reuters) – Austerity steps announced by Greece on Wednesday may pave the way for European Union government aid, easing fears that Greece could lose its ability to borrow from debt markets at affordable rates.

But market worries about Greece are likely to remain acute for the foreseeable future, and doubts will remain over its ability to hit fiscal targets amid a deep recession.

Confidence in the euro currency and euro zone assets in general will probably not revive fully. Any EU aid to Greece would not resolve big divergences in the performances of euro zone economies, and could create a precedent for the zone’s rich states to bail out the profligate spending of poor ones.

PROSPECTS FOR EU AID

Greece’s announcement may be a key step towards an informal aid-for-austerity exchange deal with EU governments.

All parties are under growing time pressure to reach a deal on easing the crisis because Greece needs to refinance about 20 billion euros of debt maturing in April and May.

A summit is coming

By Jan Strupczewski

IQALUIT, Canada, Feb 5 (Reuters) – Deepening woes about euro zone debt added urgency Friday to a meeting of G7 finance leaders in the Canadian Arctic that includes unique features like ministerial dog sledding and caribou dinners.

In Europe, policymakers scrambled to reassure markets about the stability of their 16-nation currency bloc as investors shed euro assets for a second day on fears about debt-laden member states like Greece and Portugal.

The sell-off comes as finance ministers and central bank governors of the euro zone’s top three economies — Germany, France and Italy — fly to meet their counterparts from the United States, Canada, Japan and Britain for the Group of Seven’s most remote and inaccessible meeting to date.