The European Union’s financial services commissioner, Michel Barnier, is ready to unveil his proposal for a single banking watchdog across the entire eurozone, said a report by AFP on Sunday, in a move that will give the European Central Bank (ECB) supervisory power over 6,000 eurozone banks in the process.
In the European Central Bank’s (ECB) strongest commitment to date to tackle the European debt crisis, ECB President Mario Draghi pledged on Thursday to buy unlimited amounts of government bonds from struggling economies, though he admitted that there had been some dissention on the ECB board for the initiative.
Moody’s Investors Service lowered the European Union’s credit rating outlook from ‘stable’ to ‘negative’ on Monday, citing risks in the region’s last remaining Aaa-rated economies – Germany, France, the U.K. and Netherlands – as the reasons behind the cut.
The move follows a similar action in July, when Moody’s had revised the outlooks of Germany and the Netherlands to ‘negative’; while France and the U.K. had already seen their outlooks lowered earlier this year.
The European Central Bank is under pressure to ride to the eurozone’s rescue. According to the Secretary-General of the Organisation for Economic Co-operation and Development, the ECB can and should do more to stem the eurozone crisis because current financial facilities are simply not enough.
Speaking at an international business and political conference in Slovenia, Angel Gurria of the OECD yesterday urged the ECB to provide a “credible signal” to markets and resume bond-buying to help stem financing costs for debt-ridden countries like Spain and Italy.
A series of important meetings take place this week. US Secretary of State Hillary Clinton meets with Asian leaders in Indonesia and China respectively, before attending the APEC ministerial talks in Russia at the end of the week. However, an even bigger market focus this week could prove to be ECB Mario Draghi’s plans eurozone recovery. He is expected to chair a policy meeting this Thursday.
Monday, September 3
China has pledged more help for the deteriorating eurozone crisis, with Premier Wen Jiabao promising to purchase more EU government bonds.
Speaking at a joint press conference with German Chancellor Angela Merkel at the end of a two-day official visit to Beijing, the Premier said China remains confident in the euro and will continue to buy European bonds to help debt-ridden European countries ride out the crisis.
However, he said it is important that European leaders “strike a balance” between a fiscal tightening and economic stimulus.
Greek Prime Minister Antonis Samaras as called on international lenders for “more time” and “breathing room” as it struggles to meet its bailout obligations. However, he insisted that Greece is not looking for additional bailout money.
His comments were published by Bild, Germany’s most-read newspaper, who had recently accused Greece of “making our euro kaput” and had only a few days ago referred to the country as a “bottomless pit.”
The European Central Bank (ECB) is planning to hire more workers to monitor the eurozone crisis, reported the Associated Press on Wednesday, after Bank President Mario Draghi admitted that his 1,600-strong full-time staff were “overworked” and at risk of burning out.
A leading member of the European Central Bank has said a Greek exit from the common currency would eventually be manageable. However, the official cautioned that it is not the preferred outcome for the eurozone debt crisis as the process could be chaotic and extremely costly.
The comments by ECB executive board member Joerg Asmussen came at the start of a crucial week for Greece as it aims to persuade partners to release more bailout aid to keep the economy afloat.
Finland’s foreign minister has openly admitted that the Nordic state is preparing for the possibility of a eurozone breakup.
In an interview with the Telegraph, Erkki Tuomioja, Finland’s veteran foreign minister said that Finnish officials have been preparing for the breakup of the single currency with an “operational plan for any eventuality.”
He said:
