Opinion

Paul Taylor

ECB doomed to bigger crisis role despite itself

Paul Taylor
Oct 31, 2011 09:40 UTC

PARIS (Reuters) – Ask senior European Union policymakers in private what can stop the euro zone’s festering sovereign debt crisis and the answer is “the European Central Bank”.

The federal institution at the heart of the 17-nation currency area could declare itself Europe’s lender of last resort, reassuring markets that there will always be someone to buy member states’ bonds.

Economists from New York to Beijing are convinced such a move, backed by the central bank’s power to print money, would stop the run on Italian and Spanish debt swiftly and help restore confidence in the euro area.

But it runs counter to half a century of German monetary orthodoxy and would require a change in the EU’s governing treaty to remove a prohibition on the central bank funding governments, which Berlin would be certain to oppose.

Making the ECB the euro zone’s ultimate backstop is the course advocated publicly by non-euro Britain and privately by some U.S. policymakers, but it looks unlikely any time soon.

Analysis: ECB doomed to bigger crisis role despite itself

Paul Taylor
Oct 31, 2011 07:04 UTC

PARIS (Reuters) – Ask senior European Union policymakers in private what can stop the euro zone’s festering sovereign debt crisis and the answer is “the European Central Bank.”

The federal institution at the heart of the 17-nation currency area could declare itself Europe’s lender of last resort, reassuring markets that there will always be someone to buy member states’ bonds.

Economists from New York to Beijing are convinced such a move, backed by the central bank’s power to print money, would stop the run on Italian and Spanish debt swiftly and help restore confidence in the euro area.

French challenger Hollande seeks German dialogue-aide

Paul Taylor
Oct 25, 2011 17:13 UTC

PARIS, Oct 25 (Reuters) – French Socialist presidential
candidate Francois Hollande aims to visit Germany soon to
present himself as a credible, fiscally prudent partner in
European leadership ahead of next year’s election, a senior aide
said on Tuesday.

Pierre Moscovici, Hollande’s campaign manager in this
month’s Socialist primary, said the frontrunner in opinion polls
for the 2012 election would go to Berlin before the end of the
year and wanted to meet Chancellor Angela Merkel as well as the
opposition Social Democrats and Greens.

Moscovici said conservative President Nicolas Sarkozy had
turned France into a weak “junior partner” for Germany by
failing to control public finances and taking impulsive,
ill-coordinated initiatives in the euro zone debt crisis.

Euro zone nears flawed crisis strategy

Paul Taylor
Oct 24, 2011 14:26 UTC

BRUSSELS (Reuters) – First the good news: European leaders are nearing a strategy to counter the euro zone’s sovereign debt crisis. Now, the less good news: it has some apparent flaws and may fall apart.

Under an emerging deal likely to be struck on Wednesday, Greece’s debt will be reduced, European banks will be recapitalised, the euro zone’s rescue fund will scaled up to provide partial insurance in sovereign bond markets, and Italy will be pressured into getting serious about economic reform.

Each of those planks may fall short of expectations.

The euro and stocks rose after Sunday’s first part of a two-leg summit on hopes that Europe is finally close to adopting a comprehensive response to the two-year-old crisis, which has sent shudders through the global economy.

Analysis: Euro zone nears flawed crisis strategy

Paul Taylor
Oct 24, 2011 13:52 UTC

BRUSSELS (Reuters) – First the good news: European leaders are nearing a strategy to counter the euro zone’s sovereign debt crisis. Now, the less good news: it has some apparent flaws and may fall apart.

Under an emerging deal likely to be struck on Wednesday, Greece’s debt will be reduced, European banks will be recapitalized, the euro zone’s rescue fund will scaled up to provide partial insurance in sovereign bond markets, and Italy will be pressured into getting serious about economic reform.

Each of those planks may fall short of expectations.

The euro and stocks rose after Sunday’s first part of a two-leg summit on hopes that Europe is finally close to adopting a comprehensive response to the two-year-old crisis, which has sent shudders through the global economy.

Spain downgrade ups pressure on EU to act

Paul Taylor
Oct 19, 2011 06:52 UTC

NEW YORK/PARIS (Reuters) – A double-notch downgrade to Spain’s credit ratings has piled more pressure on European leaders to make rapid progress on solving the region’s debt crisis or face unbearable borrowing costs.

The fresh blow from Moody’s Investors Service came just a day after the agency warned France its triple-A rating could be at risk.

“If the euro zone can’t figure a way to handle the situation, you are going to see Spanish yields continue to go up, and they are going to have a problem to fund themselves , ” said Jessica Hoversen, currency and fixed income analyst at MF Global in New York.

French credit review threatens euro zone rescues

Paul Taylor
Oct 18, 2011 07:53 UTC

PARIS (Reuters) – Moody’s decision to review France’s triple-A credit rating cast new doubt on Tuesday on Europe’s hopes of drawing a line under its sovereign debt crisis, five days before a crucial EU summit.

The U.S. ratings agency said late on Monday it may slap a negative outlook on France’s Aaa rating in the next three months if the costs for helping bail out banks and other euro zone members stretch its budget too much.

The warning, which sent the risk premium on French government bonds shooting up to a euro lifetime high, came as European Union leaders are preparing measures to protect the region’s financial system from a potential Greek debt default.

Euro zone eyes yet another “comprehensive strategy”

Paul Taylor
Oct 17, 2011 15:37 UTC

BRUSSELS (Reuters) – A cloud of gloom hangs over Brussels ahead of yet another summit to thrash out yet another “comprehensive strategy” to tackle a sovereign debt crisis that Europe has failed for two years to stem, and that now threatens the world economy.

Gallows humour was rife among the grandees of European integration at the annual conference of the Friends of Europe think-tank on “the state of the union” last week.

“Hopefully next year we won’t be talking about Greek debt,” Etienne Davignon, 79, a Belgian former European Commissioner and patriarch of the European project, joked in his closing remarks.

Analysis: Euro zone eyes yet another “comprehensive strategy”

Paul Taylor
Oct 17, 2011 05:54 UTC

BRUSSELS (Reuters) – A cloud of gloom hangs over Brussels ahead of yet another summit to thrash out yet another “comprehensive strategy” to tackle a sovereign debt crisis that Europe has failed for two years to stem, and that now threatens the world economy.

Gallows humor was rife among the grandees of European integration at the annual conference of the Friends of Europe think-tank on “the state of the union” last week.

“Hopefully next year we won’t be talking about Greek debt,” Etienne Davignon, 79, a Belgian former European Commissioner and patriarch of the European project, joked in his closing remarks.

Germany, France split on bank aid before summit

Paul Taylor
Oct 7, 2011 10:46 UTC

BERLIN/PARIS, Oct 7 (Reuters) – Germany and France are split
ahead of crucial summit talks on Sunday over how to strengthen
shaky European banks and fight financial market contagion to
prepare for a possible Greek default, diplomats said on Friday.

Under strong U.S. and market pressure, Chancellor Angela
Merkel and President Nicolas Sarkozy will try to bridge sharp
differences on how to use the euro zone’s financial firepower to
counter a sovereign debt crisis that threatens the global
economic recovery.

A German source said Paris wanted to tap the euro zone’s 440
billion rescue fund to recapitalise its own banks, which have
the largest exposure to peripheral euro zone debt, while Berlin
insisted the fund should be used only as a last resort when no
national funds are available.

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