Opinion

Paul Taylor

Exclusive: ECB limits bond buying, euro zone looks to banks

Paul Taylor
Dec 9, 2011 14:13 UTC

BRUSSELS (Reuters) – The European Central Bank is capping its weekly bond purchases at 20 billion euros and euro zone officials hope its new bumper liquidity provision will allow banks to buy more government debt and ease crisis-hit states’ borrowing costs, ECB sources said on Friday.

The bank has bought no more than 22 billion euros worth of bonds in any week since it reactivated its bond-buy program in August. ECB sources said it would keep purchases to a maximum of 20 billion euros now and is not considering bigger action in response to an EU summit decision to create a fiscal union.

Twenty-three of the EU’s 27 leaders agreed to pursue tighter integration with stricter budget rules for the euro zone, though Britain said it could not accept proposed amendments to the EU treaty after failing to secure concessions for itself.

“We more or less anticipated what would come out,” one ECB source said. “We don’t see any need for new deliberation.”

The ECB bond-buy cap would remain at the level set weekly for the last few weeks by the Governing Council, a second source said. Weekly purchases have not topped 10 billion euros since September, less than half the limit.

Europe splits over fiscal union

Paul Taylor
Dec 9, 2011 08:49 UTC

BRUSSELS (Reuters) – Europe divided on Friday in a historic rift over building a fiscal union to preserve the euro, with a large majority of countries led by Germany and France agreeing to move ahead with a separate treaty, leaving Britain isolated.

Twenty-three of the 27 leaders agreed to pursue tighter integration with stricter budget rules for the single currency area, but Britain said it could not accept proposed amendments to the EU treaty after failing to secure concessions for itself.

After 10 hours of talks, all 17 members of the euro zone and six countries that aspire to join resolved to negotiate a new agreement alongside the EU treaty with a tougher deficit and debt regime to insulate the euro zone against the debt crisis.

Europe splits over fiscal union, UK isolated

Paul Taylor
Dec 9, 2011 08:31 UTC

BRUSSELS, Dec 9 (Reuters) – Europe divided on Friday
in a historic rift over building a fiscal union to preserve the
euro, with a large majority of countries led by Germany and
France agreeing to move ahead with a separate treaty, leaving
Britain isolated.

Twenty-three of the 27 leaders agreed to pursue tighter
integration with stricter budget rules for the single currency
area, but Britain said it could not accept proposed amendments
to the EU treaty after failing to secure concessions for itself.

After 10 hours of talks, all 17 members of the euro zone and
six countries that aspire to join resolved to negotiate a new
agreement alongside the EU treaty with a tougher deficit and
debt regime to insulate the euro zone against the debt crisis.

Insight: Conflicting visions at core of euro zone crisis

Paul Taylor
Dec 6, 2011 10:48 UTC

PARIS (Reuters) – Same bed, different dreams.

Since the inception of the euro, France and Germany have pursued divergent visions of European economic and monetary union. In two decades, the French have become a little more German, the Germans a little more French. But the gulf remains.

With the fate of the 17-nation single currency at stake at a summit this week, 20 years almost to the day since the Maastricht summit at which European leaders agreed to merge their monies, the same battles are still being fought out.

Between sovereignty and federalism; between “stability” and growth; between more solidarity and stricter discipline; between a directorate of big states and a more democratic organization for the continent; and between a tightly-knit “core Europe” and a broader but looser union.

Conflicting visions at core of euro zone crisis

Paul Taylor
Dec 6, 2011 10:30 UTC

PARIS, Dec 6 (Reuters) – Same bed, different dreams.

Since the inception of the euro, France and Germany have
pursued divergent visions of European economic and monetary
union. In two decades, the French have become a little more
German, the Germans a little more French. But the gulf remains.

With the fate of the 17-nation single currency at stake at a
summit this week, 20 years almost to the day since the
Maastricht summit at which European leaders agreed to merge
their monies, the same battles are still being fought out.

Between sovereignty and federalism; between “stability” and
growth; between more solidarity and stricter discipline; between
a directorate of big states and a more democratic organisation
for the continent; and between a tightly-knit “core Europe” and
a broader but looser union.

Decision time for EU, with euro’s future at stake

Paul Taylor
Dec 4, 2011 14:34 UTC

PARIS, Dec 4 (Reuters) – The euro faces a decisive
week as European Union leaders, urged on anxiously by the United
States, seek agreement on the definitive rescue plan that has
eluded them for two years.

Despite short-term market optimism about a possible deal to
tackle Europe’s sovereign debt crisis and ensure the survival of
the single currency, the outcome is far from certain as the EU
gears up for a summit in Brussels on Thursday and Friday.

“This week, the stable future of the euro and thus the
economic recovery in Europe and employment are at stake,” EU
Economic and Monetary Affairs Commissioner Olli Rehn told
Reuters. “This calls for a convincing package of measures from
the European Council (summit).”

Euro zone enters decisive week, outcome uncertain

Paul Taylor
Dec 4, 2011 13:37 UTC

PARIS (Reuters) – The euro faces a decisive week as European Union leaders, urged on anxiously by the United States, seek agreement on the definitive rescue plan that has eluded them for two years.

Despite short-term market optimism about a possible deal to tackle Europe’s sovereign debt crisis and ensure the survival of the single currency, the outcome is far from certain as the EU gears up for a summit in Brussels on Thursday and Friday.

“This week, the stable future of the euro and thus the economic recovery in Europe and employment are at stake,” EU Economic and Monetary Affairs Commissioner Olli Rehn told Reuters. “This calls for a convincing package of measures from the European Council (summit).”

Euro zone enters a decisive week

Paul Taylor
Dec 4, 2011 13:13 UTC

PARIS (Reuters) – The euro faces a decisive week as European Union leaders, urged on anxiously by the United States, seek agreement on the definitive rescue plan that has eluded them for two years.

Despite short-term market optimism about a possible deal to tackle Europe’s sovereign debt crisis and ensure the survival of the single currency, the outcome is far from certain as the EU gears up for a summit in Brussels on Thursday and Friday.

“This week, the stable future of the euro and thus the economic recovery in Europe and employment are at stake,” EU Economic and Monetary Affairs Commissioner Olli Rehn told Reuters. “This calls for a convincing package of measures from the European Council (summit).”

IMF in exploratory talks with Italy on support -sources

Paul Taylor
Nov 29, 2011 21:12 UTC

WASHINGTON/BRUSSELS, Nov 29 (Reuters) – Italy has had
preliminary discussions with the International Monetary Fund
about financial support to cope with the euro zone’s debt
crisis, possibly co-funded by national European central banks,
but no decision has been taken, several sources close to the
situation said.

New Italian Prime Minister Mario Monti was briefing euro
zone finance ministers on his fiscal plans on Tuesday but the
sources said no formal request for IMF assistance was expected
before he presents his budget to the cabinet on Dec. 5.

In Spain, the centre-right People’s Party (PP), which won a
Nov. 20 general election, is considering seeking international
aid as one option for shoring up Madrid’s public finances,
according to sources close to the party.

Insight: Euro zone staring into the abyss, waiting for ECB

Paul Taylor
Nov 28, 2011 06:57 UTC

BRUSSELS (Reuters) – The euro zone is staring into the abyss.

Unless European leaders agree on a political remedy for their sovereign debt crisis at a December 9 summit, and the European Central Bank then intervenes massively to support government bonds and European banks, the euro may start to unravel.

Foreign investors are already shunning euro area sovereign bonds, European banks are desperately trying to sell assets including bonds, depositors are withdrawing growing amounts from southern European banks, and interbank lending is freezing up, forcing ever more lenders to turn to the ECB for funds.

Italy, the third largest and most vulnerable euro zone state, has a mountain of debt to refinance from January, and its short-term borrowing rate hit an alarming 8 percent on Friday.

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