Eurozone finance ministers rejected a plea from Timothy Geithner, the US Treasury Secretary, to expand the European Financial Stability Fund (ESFS) to tackle the escalating debt crisis in the region. He called for the 17 European countries that use the single currency to commit money to avoid financial system difficulties but rejected suggestions for a financial transaction tax, Austria's finance minister said. Maria Fekter was commenting on an exchange between Mr Geithner and finance ministers including Germany's Wolfgang Schaeuble in Poland on Friday. She said: "He conveyed dramatically that we need to commit money to avoid bringing the system into difficulty ... [but] Schaeuble made him very aware that it was unlikely to be possible to push that onto taxpayers, and especially not if [the burden] is imposed mainly on the triple-A countries." Ms Fekter said: "In these countries, there is a desire for a transaction tax because a transaction tax would use the liquidity which is on the market for stability. He (Geithner) ruled that out." At the meeting in the Polish city of Wroclaw, eurozone countries delayed a decision on whether to grant the next $8bn tranche of bailout funds to Greece until next month. A European Commission team arrived in Athens this week to assess the progress of the austerity drive, and will report back to Brussels. The basis of the team’s findings will dictate whether the funds will be released. Mr Geithner's presence in Wroclaw reflects deep worries in Washington that the scale of euro-zone debt crisis could inflict further woe on America’s struggling economy. “What is very damaging (in Europe) from the outside is not the divisiveness about the broader debate, about strategy, but about the ongoing conflict between governments and the central bank, and you need both to work together to do what is essential to the resolution of any crisis,” he said after the meeting. “Governments and central banks have to take out the catastrophic risks from markets ... (and avoid) loose talk about dismantling the institutions of the euro.” Euro-zone ministers also called for the ratification of the July 21 agreement on upgrading the European Financial Stability Facility (EFSF). The agreement allows for the facility to recapitalize institutions and intervene in the markets. They called for all member states to ratify the agreement by early October.
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Friday, September 16, 2011
Eurozone finance ministers rejected a plea from Timothy Geithner, the US Treasury Secretary, to expand the European Financial Stability Fund (ESFS) to tackle the escalating debt crisis in the region. He called for the 17 European countries that use the single currency to commit money to avoid financial system difficulties but rejected suggestions for a financial transaction tax, Austria's finance minister said. Maria Fekter was commenting on an exchange between Mr Geithner and finance ministers including Germany's Wolfgang Schaeuble in Poland on Friday. She said: "He conveyed dramatically that we need to commit money to avoid bringing the system into difficulty ... [but] Schaeuble made him very aware that it was unlikely to be possible to push that onto taxpayers, and especially not if [the burden] is imposed mainly on the triple-A countries." Ms Fekter said: "In these countries, there is a desire for a transaction tax because a transaction tax would use the liquidity which is on the market for stability. He (Geithner) ruled that out." At the meeting in the Polish city of Wroclaw, eurozone countries delayed a decision on whether to grant the next $8bn tranche of bailout funds to Greece until next month. A European Commission team arrived in Athens this week to assess the progress of the austerity drive, and will report back to Brussels. The basis of the team’s findings will dictate whether the funds will be released. Mr Geithner's presence in Wroclaw reflects deep worries in Washington that the scale of euro-zone debt crisis could inflict further woe on America’s struggling economy. “What is very damaging (in Europe) from the outside is not the divisiveness about the broader debate, about strategy, but about the ongoing conflict between governments and the central bank, and you need both to work together to do what is essential to the resolution of any crisis,” he said after the meeting. “Governments and central banks have to take out the catastrophic risks from markets ... (and avoid) loose talk about dismantling the institutions of the euro.” Euro-zone ministers also called for the ratification of the July 21 agreement on upgrading the European Financial Stability Facility (EFSF). The agreement allows for the facility to recapitalize institutions and intervene in the markets. They called for all member states to ratify the agreement by early October.
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The European Commission downgraded its expectations for the second half of the year from its spring forecast, citing the banking crisis in the eurozone and the global economic slowdown.
Forecasts of a 1.6pc growth in GDP in the eurozone and 1.7pc in the EU are unchanged but the Commission has cut its GDP growth forecast for the third and fourth quarters by 0.2 and 0.3 percentage points respectively.
Announcing the interim report, EU economic affairs commissioner Olli Rehn said: "The key findings are that economic growth in the European Union is expected to come to a virtual standstill towards the end of the year.
"Compared to our Spring forecast, prospects are gloomier and risks to the growth outlook are tilted to the downside."
The Commission said growth had "softened" in the second quarter as risks to the recovery increased
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