Private Sector Fears EU’s Bailout Plans
The European currency lost yesterday, ground against the U.S. dollar, a day after adoption by the EU to Ireland’s rescue plan, investors continued to fear a possible crisis and spread to other countries in the euro area or faction. Moreover, according to BNP Paribas forecasts, community currency will reach the first part of next year to $ 1.25 from $ 1.32 now, as in Q3 2011 was down to $ 1.20
In this context, the government confirmed yesterday the 27 of its previous forecasts, announcing a slowdown in the euro zone next year to 1.5%, after the progress of 1.7% in 2010. However, the Commission anticipates an acceleration to 1.8% in 2012. At the same time, it showed much more pessimistic about the level that Portugal and Spain budget deficits will reach it next year, but governments of both countries. In conclusion, the EU government has labeled as “worrying” situation on financial markets and did not rule out “possible new tensions.”
Not accidentally, the EU finance ministers were in Brussels on Sunday got about involvement “in case” a private bank in the permanent fund to support future euro area after 2013. Paris and Berlin to debate this issue for several weeks. The idea is that banks and investment funds that hold bonds to help fund the planned, assuming, as a part of the budgetary costs of any new crisis. Private sector participation, said ministers should not be systemic, it will intervene “depending on circumstances, on a case by case basis.” Germany and France wanted a prompt involvement.
European Financial Stability Fund figured on the agenda of the meeting in Deauville, French President Nicolas Sarkozy and the German Chancellor Angela Merkel on 18 October. Meanwhile, to cope with crisis crossing the euro area, the idea of doubling the value of EU fund, currently at 440 billion euros (plus 60 billion euros earmarked by the European Commission and made available 250 billion IMF), has been raised several times, but firmly rejected by Berlin. Therefore, it was this compromise solution, which provides for the establishment, by 2013, a permanent mechanism for private sector involvement.11