After the summer lull, euro zone and EU finance ministers meet in Lithuania. The “informal Ecofin” can often be quite a big deal but with German elections only nine days away, it’s hard to see that being the case this time.
During the election campaign German Finance Minister Wolfgang Schaeuble let slip that Greece would need more outside help which would not include a haircut on Greek bonds held by euro zone governments and the ECB.
Since then, European Central Bank policymaker Luc Coene has said Athens might need two bouts of further assistance and Estonia’s prime minister told us yesterday the popular bailout fatigue he flagged as a danger last year had now faded and he was open to aiding Greece with a third bailout and helping other troubled euro zone nations too.
Italy’s political soap opera is the flashpoint of the moment but Greece, Cyprus, Portugal and Slovenia are in a much more fragile state economically and progress on banking union has slowed to a crawl although the European Parliament has voted through the ECB’s powers to take over a regulatory role in a year’s time.
With the ECB effectively underwriting the bloc’s governments with its bond-buying pledge, a cross-border body to restructure or wind up failing banks would do the same for the financial sector. Without it, the seeds of the next crisis could have been sown.