Fidest – Agenzia giornalistica/press agency

Quotidiano di informazione – Anno 31 n° 259

Posts Tagged ‘Eurozone’

WakEUp, revive Europe!

Posted by fidest press agency su venerdì, 15 giugno 2018

Everyone agrees Europe needs change, yet very little gets done. It is time to send a message to our leaders to stop sleepwalking towards the collapse of Europe and to take the action needed to create a sovereign, democratic and united Europe.
The organisers invite all those who believe Europe needs political unity, those who think EU political leaders must take action to revive Europe now to join the demonstration “#wakEUp, revive Europe!” on June 28th as of 13:00 in front of the European Council (“Petite rue de la Loi”, between rond-point Schuman and Parc du Cinquantenaire).“The Eurozone is in sheer need of reforms. Leaders have been discussing them for years, but they fail to deliver over and over again. They know that the Eurozone and the EU cannot work in the interest of European citizens with such a tiny budget. The spread of populist and nationalist movements shows how deep the crisis of trust is. If national leaders don’t act now, they will be responsible for the collapse of the European project”, says Paolo Vacca, Secretary-General of the Union of European Federalists. “Some member states, at the head of which Germany, do not realise the urgency of reforming the EU because, at least for the moment, everything goes well for them. But they would be the first losers of an unravelling of the EU. They think we have time, but actually European citizens are asking for a change now. Either they do it, or voters will turn to the populists”, adds Christopher Glück, President of the Young European Federalist.

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Sovereign Debt Restructuring: The Greek Challenge Does the past dictate the future?

Posted by fidest press agency su sabato, 25 luglio 2015

ateneLatest comment by IMD Professor Carlos Braga: “In contrast to the usual great memories spent on the Mediterranean, this July will rather be remembered in a less sunny manner. It will go down in history as the first time that the irreversibility of the European Union’s evolving monetary union, the Eurozone, was put in doubt by one of its founding members (Germany). The Greek economic crisis – and the possibility of a Grexit – has fostered an intense debate about the future of the euro. The most recent outcome of this debate was the beginning of a new bailout negotiation, expected to amount to EUR 86 billion. In parallel with bridge loans from the ECB and the Eurogroup to address Greece’s liquidity problems, this bailout is intended to support the Greek economy and to avoid the meltdown of its financial sector. Yet sentiments around it run deep. The current situation in the Eurozone brings to mind the famous opening lines of Tolstoy’s novel Anna Karenina: “Happy families are all alike; every unhappy family is unhappy in its own way.”Similarly, the recent “solution” to the Greek crisis has left all parties involved unhappy for different reasons. For Greece, it underscored the limits of its “sophomoric” strategy, requiring a dramatic turnaround in its negotiating position from early July. Faced with the danger of a financial collapse, Greece ended up accepting even harsher conditions from creditors in spite of the results of the July 5th referendum (see Professor Reacts) that had given the Syriza government a mandate to resist continuing fiscal austerity. In short, the pain of the “capitulation” and the prospects of a new chapter of austerity cum reforms do not bode well for Greeks to take ownership of the upcoming bailout program.
For Germany, at first sight, the results seem to confirm the victory of the rules-based austerity “school of thought” as an answer to the Eurozone crisis. However, by mentioning a “Plan B” that would involve a temporary Grexit, Minister Schäuble hinted that one of the basic tenets of the monetary union, its irreversibility, is not set in stone. For some analysts, this was more a tactical move to underscore the exasperation of several creditor countries vis-à-vis Syriza’s negotiating antics rather than a real alternative. Nonetheless, the ensuing debate revealed divisions between those that see the objective of an ever more integrated Europe as the ultimate driver of political decisions in the EU and those that believe that an imperfect monetary union cannot survive divergent fiscal trends. In short, it reopened the debate about the need for fiscal transfers (in the name of European solidarity) and more specifically the need for additional debt relief.
Greece has significant historical experience with debt defaults and restructurings. Since its independence in 1829, modern Greece has been involved in 5 defaults and/or restructurings of debts before the current crisis. To put things in perspective up to 2008, Greece spent roughly 50% of its independent life facing debt problems, while Argentina – the poster child among serial defaulters – although with a higher number of crises episodes, enduring 7, spent only roughly 33%of its sovereign history confronting debt crises (from 1816 to 2008).
Moreover, Greece stands out among current high income economies, as the only country that has defaulted twice, in 1894 and 1932, when its public debt surpassed 100% of GDP. Ironically, the other high income economy that also defaulted once this threshold was breached was Germany in 1918.One could argue that Greece’s historical experiences have limited relevance for the current crisis, since they happened amid nation-building efforts and followed Greco-Turkish wars. In this context, they resemble more the growing pains of an emerging economy with a significant proportion of their debt denominated in a foreign currency. There are some lessons, however, to extract. First, it is very difficult for countries with an excessive debt overhang to grow out of a debt crisis. Second, this is particularly true when the country lacks solid domestic institutions and faces a crisis amid a difficult external environment.By 2010, Greek debt had already reached 130% of GDP at EUR 300 billion and its fiscal deficit was around 15.5% of GDP. It was clear that Greece was on an unsustainable debt path and a major adjustment cum debt restructuring was the most likely outcome. Still, creditors tried to keep appearances – in 2010 the IMF even released a study entitled: “Default in Today’s Advanced Economies: Unnecessary, Undesirable, and Unlikely.” This was done to curb concerns about contagion in the euro periphery in light of the Lehman Brothers experience.Two years later, however, the largest sovereign debt restructuring ever became a reality. Private sector creditors had to accept a haircut on Greek debt of more than 50%: a debt relief in excess of EUR 100 billion. Moreover, official creditors stepped in with credits of longer maturity and with lower interest rates, diminishing the burden of debt servicing for Greece in a substantial manner. Still, things did not improve. The austerity drag on the Greek economy, combined with the poor implementation of structural reforms, pushed debt to 176% of GDP by mid-2015. The bad economic dynamics of the last few months and the escalating financing needs of the Greek economy suggest that this ratio will peak above 200% in the near future. Accordingly, a new debt restructuring is inevitable and the IMF became the first official creditor to recognize this reality.
The fly in the ointment is that the circumstances today are quite different from those that prevailed in 2012. The Greek debt is currently mainly a public sector affair, with roughly 80% of it being held by international institutions (IMF, ECB, and Eurozone mechanisms) and European governments. The good news is that the danger of contagion is limited, given the official characteristics of the holders of the Greek debt (relief is unlikely to create significant negative market spillovers) in a macro environment with high liquidity in view of the ongoing quantitative easing from the ECB. The bad news is that these creditors are typically much more skeptical of providing debt relief when they are directly involved.The history of debt relief in the context of the Heavily Indebted Poor Countries (HIPC) and the Multilateral Debt Relief Initiative (MDRI) programs of the IMF/World Bank come to mind.* It took substantial external pressure and a long and complex process for multilateral creditors and bilateral donors to accept the idea of debt relief in the case of low income countries. The debate in the case of Greece, a high income economy, will be even more contentious. Still, the concept of tying future official debt relief to broad economic performance indicators including social expenditures, as in the case of HIPC/MDRI, is worth considering.The reaction of official creditors at this stage, however, remains quite cautious. Germany, for example, has made it clear that the focus should be on the negotiation of the new bailout program and that outright debt write-down involving public creditors is against the rules of the Eurozone. Article 125 of the Lisbon Treaty is often invoked in this context as the non-bail-out clause of the EU. Needless to say, the legal interpretation of this clause is open to debate. But the reality is that the political willingness to consider further debt relief is in short supply.Germany, for example, has already indicated that at best one could discuss a re-profiling (extension of maturities) of the debt once the bailout negotiations are successfully concluded. This, however, will only work if the grace period were to be substantially extended (e.g., 30 years for the whole stock of official debt). This will not be an easy sell in many European capitals. The alternative, however, is even worse since it will require a leap-of-faith concerning resumption of growth in Greece (sustained rates of at least 2% per year) in an environment characterized by consistent primary surpluses of 3.5% per year. In other words, the expectation that Greece will become a “new” Germany. To make things even worse, the lack of ownership of the reform program by Greek politicians further magnifies the chances of failure.Former Citibank chairman Walter Wriston used to quip in the 1980s that “countries don’t go bust.” The current misalignment of expectations between creditors and the Greek government, as well as the refusal to face reality vis-à-vis the need for substantive debt relief, have put the Eurozone in a collision route that will reframe the definition of what bankruptcy means for a sovereign”.
Carlos A. Primo Braga is Professor of International Political Economy at IMD, and Director of The Evian Group@IMD.Braga was the Director of the Economic Policy and Debt Department of the World Bank during 2008-10. This was the department that coordinated the HIPC and MDRI initiatives for the World Bank.

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Statement by Martin SCHULZ, EP President on the situation in Greece following the Referendum

Posted by fidest press agency su lunedì, 6 luglio 2015

Martin-schulz“The ‘no’ side has won the referendum with an overwhelming majority and we have to respect the vote of the Greek people. In full sovereignty they expressed a clear ‘no’ to the proposals on the table in the eurozone. This is a difficult day: there’s a broad majority in Greece and the promise of Prime Minister Tsipras to the Greek people that with the ‘no’ the position of Greece for negotiating a better deal would become better is, in my eyes, not true…
“…We are in a difficult situation, the Greek people said no, but eighteen other states of the eurozone agreed about the proposals to which the Greek people said ‘no’. But this is democracy in Greece and democratic governments and parliaments in other countries had another view a different view. It is now up to the Greek government to make proposals which could convince the eighteen other member states of the eurozone and the institutions in Brussels that it is necessary, possible and even effective to renegotiate, but this depends now on the proposals coming from Greece…”
.. But, nevertheless we have to respect the sovereignty and the will that the greek people expressed today in the referendum. The promise of the minister of finance that the banks will open tomorrow and that money will be available for tomorrow and Tuesday seems to me very difficult and dangerous. And, therefore, because I believe that the Greek people will be, during the week and even every day in a more difficult situation, I think we should tomorrow, at the latest on Tuesday for the eurozone summit discuss about a humanitarian aid programme for Greece…”
“…Ordinary citizens, pensioners, sick people or children in the kindergarten should not pay a price for the dramatic situation in which the country and the government brought the country now. Therefore a humanitarian programme is needed immediately and I hope that the Greek government will make in the next coming hours meaningful and constructive proposals allowing that it is meaningful and possible te renegotiate. If not, we are entering a very difficult and even dramatic time.”

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Notre Europe

Posted by fidest press agency su mercoledì, 16 maggio 2012

The negotiations of the bailout plans for Greece, Ireland and Portugal as well as the adoption of new solidarity mechanisms have triggered a lively debate on the cost of these solidarity actions, particularly in those countries that are making the biggest contribution to those efforts such as Germany, The Netherlands, Finland and France. This Policy Brief by Sofia Fernandes and Eulalia Rubio aims to clarify some points concerning the cost of interstate solidarity exercised within the Eurozone. The analysis focuses on the budgetary cost of that solidarity, which has been at the heart of this debate. It first clarifies the nature of these solidarity actions as well as their impact on national public finances. Then it analyses the current controversy over the budgetary implications of the growing imbalances in TARGET2 positions (the payment and settlement system between the central banks in the Eurozone) and, more generally, of the exceptional actions undertaken by the European Central Bank (ECB). Lastly, in order to give an order of magnitude of this solidarity effort, the Policy Brief places the total cost of interstate solidarity efforts in perspective by comparing it to the amount of money set aside by the states to help their banks since the start of the crisis. (15/05/2012)

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CIGI experts outline prescriptions for Cannes summit and beyond in special report on G20 issues

Posted by fidest press agency su mercoledì, 19 ottobre 2011

Waterloo, Canada – October 18 – With a possible euro zone collapse and Greek insolvency likely to dominate the upcoming Cannes summit, G20 leaders are not out of options for finding a solution, a new CIGI special report says. But the major economies have lost their unity of purpose, with governance questions preventing action from taking place, the report warns.As leaders of the G20 nations prepare for their summit at Cannes, on November 3-4, CIGI experts offer policy analysis on the most critical G20 issues in the special report Prescriptions for the G20: The Cannes Summit and Beyond. The report features 11 commentaries from experts in The Centre for International Governance Innovation’s (CIGI) G20 Working Group. Each commentary deals with the discrete facets of the G20’s work related to a particular pressing issue, including: the future direction of global economic policy; strengthening international financial regulation; the mutual assessment process for resolving global imbalances; ensuring food security; anti-corruption efforts; and international trade. The entire Prescriptions for the G20 series is available free online via CIGI’s website at http://www.cigionline.org/ series/prescriptions-g20-cannes-summit-and-beyond

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Crisi della zona euro

Posted by fidest press agency su venerdì, 14 ottobre 2011

Il Parlamento europeo chiede la preparazione di una “road map” per uscire dalla crisi, in una risoluzione approvata giovedì che propone, fra l’altro, la ricapitalizzazione delle banche europee, un’ulteriore armonizzazione dei sistemi fiscali nazionali, l’emissione di Eurobond e una governance comunitaria per la zona euro più forte. I deputati, in una risoluzione approvata giovedì, chiedono alla Commissione di presentare un piano UE, con una precisa tabella di marcia, per ripristinare la fiducia nei mercati finanziari. Il piano dovrebbe essere basato sul metodo comunitario, inserito cioè nella struttura decisionale dell’Unione, ed evitare l’utilizzo di strumenti intergovernativi. Il Parlamento ritiene che la ricapitalizzazione delle banche debba avvenire a livello europeo e non essere attuata secondo priorità nazionali. I deputati propongono anche di completare la riforma del regolamento comunitario sul mercato finanziario, per rendere l’UE più forte nel caso di una crisi futura, e chiedono ai governi nazionali di armonizzare i sistemi fiscali e prendere misure comuni per combattere la frode. Sul fronte della crescita, i deputati vogliono l’emissione di obbligazioni destinate al finanziamento di progetti (project bonds) e la messa a punto di un meccanismo che permetta alla Commissione di imporre con rapidità il rispetto delle regole del mercato comune agli Stati membri. Per affrontare al meglio la crisi finanziaria della zona euro, il Parlamento chiede alla Commissione di presentare, entro la fine di quest’anno, un piano per la creazione di un sistema di emissione comune di titoli sovrani europei (Eurobond), sottolineando che ciò aiuterebbe a garantire una maggiore disciplina di bilancio e più stabilità nei mercati. Infine, il testo approvato consiglia il rafforzamento della governance economica a livello UE. La risoluzione rappresenta il contributo del Parlamento alle discussioni che si terranno fra i Capi di Stato e di governo al prossimo Consiglio europeo del 23 ottobre.

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Eurozone Crisis Clouds Recovery In Emerging Europe And Central Asia

Posted by fidest press agency su sabato, 24 settembre 2011

Washington, Economic recovery is underway in the Emerging Europe and Central Asia (ECA) region, but at a slow pace and is at risk from the troubled Eurozone, according to the World Bank at a press briefing during the World Bank/IMF Annual Meetings 2011. According to the briefing, most countries in the region have recovered the output losses suffered during the 2008-9 global economic crisis. In fact, GDP remains below its 2007 level in only eight out of 30 ECA countries. Helped by high commodity prices, the countries farther to the east in the region have done much better since the crisis than those to the west. But ECA’s recovery signals a lower growth gradient than the pre-crisis rates. There has been a noticeable reduction in growth prospects: countries in the region may need to prepare for growth rates that are 2 percentage points of GDP less than what they were before the global crisis.
Unemployment increased significantly during the crisis ― in 2008 it was about 10 percent, while as of about early 2011, the overall unemployment rate for the region is at 13 percent. Meanwhile, youth unemployment remains a particular concern at 27 percent. To address this, governments have been trying to limit the effects of the crisis on labor markets through a wide range of employment programs. Some jobs are returning and unemployment has dropped since the early 2010 peak, with only a few exceptions (Bulgaria, Croatia, Slovenia, Moldova, and Hungary). But the job turnaround will remain gradual even if the economic recovery is sustained. Increases in output per worker are driven by increases in hours worked, but these are still below their pre-crisis levels. Therefore, the room for further increases in productivity and hours worked could delay the recovery in employment.
The global crisis has had a severe negative impact on public finances. During pre-crisis times, structural fiscal imbalances were masked by revenue over-performance, as buoyant economies yielded more taxes than governments often expected. During the crisis, there was sharp fiscal deterioration in most countries in the region. Public debt has gone up in many countries, leaving governments less room to counter any economic slowdown than they had in 2007.
The decline in credit to firms and households from pre-crisis levels was sharp, but necessary in some countries. While credit has been slow to recover, there are encouraging signs in most countries in the region. Only five countries in the region are still experiencing contractions in credit.
Given the importance of Greek banks in the Balkans and Italian banks in Central Europe, any problems they have would have direct effects in those countries. Some of the banks most active in emerging Europe ― especially those based in Austria and Sweden ― have limited exposure in Greece, Italy, Ireland, Portugal, and Spain, but interconnectedness on funding markets could result in adverse consequences.
Western European countries are the most important trade partners for most countries in the region, and weaker economic prospects in Europe will dampen their recovery. There are already signs of declines in export demand. Export levels in 2011 were expected to be above those reached in 2008, but recovery of exports has so far been sluggish. Now a slowdown in global activity has increased the downside risks, most sharply for countries with close economic linkages with the Eurozone.
World Bank support reached $6.1 billion this fiscal year, including $5.5 billion from the International Bank for Reconstruction and Development (IBRD) and $650 million from the International Development Association (IDA). Turkey ($1.4 billion), Romania ($1.1 billion), and Poland ($1.1 billion) were the largest borrowers. The sectors receiving the most funding were energy and mining ($1.9 billion), public administration ($1.7 billion), and health and social services ($1.2 billion). Along with funding, the Bank provides over 180 economic and technical reports every year in the Emerging Europe and Central Asia region to inform government reform efforts and prioritize its own financial support. It offers analytical support and encouragement to governments to improve labor market and social security systems and expand selected social safety net programs. The Bank is advising governments on how to fix less efficient public programs and improve social services so that their benefits reach those who need them most.

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Europe and Central Asia Economic Update

Posted by fidest press agency su venerdì, 23 settembre 2011

International Monetary Fund building on Pennsy...

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Washington, Friday, September 23, 2011 DC 1900 Pennsylvania Avenue Briefing Room 3-748 World Bank / IMF Annual Meetings: ‘Europe and Central Asia Economic Update’ press briefing*Growth has returned to the countries of the Emerging Europe and Central Asia (ECA) region. It is slower than before the global crisis, and the current economic instability across the globe is making it less sure. The region’s close economic linkages with the Eurozone present both unique challenges and opportunities, and will affect the region’s short- and long-term growth prospects.

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Economic and Financial briefing for Euro Area journalists

Posted by fidest press agency su venerdì, 16 settembre 2011

European flag outside the Commission

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04 October – 06 October 2011, Brussels (Economic and Financial Policy 2011) In the midst of ongoing turbulence in financial markets, sluggish growth and elevating debt, the European Journalism Centre is organising in early October, in co-operation with DG Economic and Financial Affairs of the European Commission, an exclusive programme for journalists specialising in economic and financial issues from the Euro Zone-17 countries. This three-day seminar will feature panel discussions as well as on and off the record talks with senior members of the EU (including the Commission and the Parliament) as well as experts from the NGO, think tank and academic communities in Brussels. Economic governance will again be a key theme as well as economic forecasts. Participating journalists will have the opportunity to attend press conferences following the meetings of finance ministers from the EU-27 (ECFIN Council)as well as the European Commission midday briefing. The discussions will be lively, informal and should significantly help those attending get the inside track on where the Euro area economy and currency is and is forecast to go in the near future.

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