When the European Sovereign Debt Crises Can Be Terminated
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Strong in the European Central Bank intervention, Ireland, Portugal and Spain, the so-called peripheral countries in the euro area has finally stop rising bond yields fall more than 3 months continued to decline in the euro exchange rate has also come to rebound. "Initial success" ECB President Trichet sigh of relief.
The so-called strong intervention is the European Central Bank has increased the intensity of intervention in the bond market. Only in the December 2, to 100 million euros it as a unit bought in batches of Portugal and Ireland's national debt, for the usual 5 times the size of purchase. This is immediate, the two countries, the day the 10-year bond yields were reduced by 0.25 and 0.5 percentage points.
Some analysts pointed out that the European Central Bank's "crazy to buy", apparently to in Ireland, Portugal and other euro zone countries to build a firewall.
Since November 28 the European Union and the International Monetary Fund joint program of the introduction of the Irish relief after the debt crisis of the EU market, not only did not alleviate the panic, and have actually more worried about it will spread to Portugal, Spain, Italy ... ... market confidence crisis intensified, resulting in bond yields in these countries continue to rise, bank shares fell sharply and dragged the euro exchange rate.
In this situation, the European Central Bank was forced to purchase a large number of emergency Love, Portugal's national debt. At the same time, President Trichet has repeatedly shouted to the market: the European Central Bank will take with the market distortions "proportionality" interventions, does not rule out expanding the scale of the financial stabilization fund and the issuance in the euro area "common bond" of the possibilities. He also claimed that the euro is a reliable currency, the euro does not exist any crisis, but need to strengthen the euro and the EU "economic governance." The information on the comfort and stability of the market have a certain effect.
However, the move was an emergency expedient, but can not cure the European sovereign debt crisis. Recent period, the EU, academics and media talking about the ways of tackling the problem of the package: first, the European Central Bank to increase efforts to buy euro zone government bonds. It is reported that so far only bought 67 billion euros debt; Second, to expand the scale of EU financial stabilization fund. The fund was established in May of this year, the total amount of 7,500 million euros. However, once Portugal and Spain are also in need of help, this stabilization fund will be depleted, and should therefore be increased as soon as possible; Third, the euro-zone countries issued the "common bond", so-called peripheral countries to help reduce borrowing costs; its four a unified fiscal policy. The euro zone single currency and unified implementation of monetary policy, fiscal policy in the euro-zone countries have their own ways, the European Union, "Stability and Growth Pact" to the fiscal deficit limits are strictly enforced, such institutional shortcomings must be changed.
In theory, the prescription seems to the point, perhaps useful, but at least for now only be shelved. As we all know, the 16-country euro zone conditions, level of development and different economic strength, the gap is large in relation to their core interests is difficult to compromise the principle of seeking common ground on issues such as fiscal policy related to national economic sovereignty, regardless of which government are not willing to hand over their financial power the European Union, a unified fiscal policy difficult to implement. In fact, these proposals have been put in Germany, said "no" issue is particularly strong against the "common bond" and the introduction of the common fiscal policy.
However, the face of European sovereign debt crisis of the potential risks, and market intervention alone can rescue the existing means can not cure. A sign of trouble, the market will set off layers of waves. When will the European sovereign debt crisis. |
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Author Resource:-
Chris Holigan a professianl writer from , it provides the high quality products, such as Sodium Metabisulfite, Calcium Chloride Manufacturer, and many more.
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By :
Jessie Stone
Submitted
2010-12-13 06:13:50 |
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