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Double up

The European Central Bank has just announced that it will almost double its ’subscribed capital’ over the next three years, from €5.76 billion to €10.76 billion. ‘Subscribed capital’ is the amount that countries pay into the ECB when they become fu…

Merkel and Sarkozy have spoken! Forget about euro-bonds. Forget about increasing the emergency funding launched last May. Europe’s leaders, when they meet in Brussels next Thursday, will face a stark reality: the limits of eurozone support have been determined, at least for now, following the Franco-German summit in Freiburg. Economic growth combined with budget restraint… » read more

Storm clouds loom once again over the eurozone. Interest rates on Portuguese, Irish and Greek government bonds are continuing to rise. Ten-year bond yields for Ireland reached a record 7.75 per cent on Monday, while for Portugal they were 6.67 per cent. The ECB started buying bonds again after several weeks’ abstention. There was some… » read more

Don’t expect the earth to tremble: this is evolution not revolution. New rules on supervision of Europe’s financial markets, which ECOFIN ministers were expected to approve on Tuesday (September 7) will certainly strengthen Europe’s capacity to anticipate trouble and to handle it when it comes, but the armoury remains firmly in the hands of intergovernmental… » read more

cart before horse?

The front page of today’s FT sported the headline, “Markets plunge on ECB loan fears”, with €442bn worth of European Central Bank emergency one-year loans to the eurozone’s ailing banking sector expiring today.Only a thought, but wouldn’t it have bee…

It was evident from the beginning of the eurozone crisis that the only way to discipline recalcitrant member states in the face of enormous budget deficits was to involve the International Monetary Fund, an independent, external organization which was definitely not part of the family, a body which could lay down tough conditions for winning… » read more

The markets have been bowled over by the scale of the eurozone bail-out package announced this morning, after agreement by G-7 finance ministers, the European Commission, the 16 eurozone governments and the International Monetary Fund. An emergency funding facility of up to €720 billion is designed to protect weaker eurozone members and save the integrity… » read more

It should be a time for celebration. The Lisbon Treaty has come into force, a new European Commission has been convincingly approved by the Parliament, the European Council has a permanent president and a European foreign policy structure has been created. Yet it feels as if Europe’s clock has been turned back ten years, to… » read more

We’ve heard a lot about banks that are “too big to fail”. Perhaps a more immediate question is whether the sovereign nation of Greece is too big to fail. The risk of default and the threat of Greece quitting the eurozone would have profound implications for Europe’s monetary union, for other European countries wrestling with… » read more

You can never leave

A recent legal paper by the European Central Bank deals with the subject: “Withdrawal and Expulsion from the EU and EMU: Some reflections”. It has received quite a bit of attention. Unsurprising, perhaps, given the state of the Greek economy (see h…

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