Strasbourg, 19 April 2012 - "The sooner we
put into operation risk-sharing instruments, the quicker the recovery of
countries worst hit by the financial crisis, such as Greece," said Danuta
Hübner, Chairwoman of the Regional Development Committee in the European
Parliament and author of a report on risk-sharing instruments adopted today in
plenary...."Austerity packages in economies most strongly hit by the
crisis have not generated growth because of dysfunctional banking sectors and
high risk aversion. There is an urgent need therefore to unlock EIB loans and
guarantees to enable private sector involvement in important growth and
jobs-creating projects, especially those co-financed by EU cohesion policy. And
this is what the risk-sharing instrument is about," said Danuta Hübner MEP. The
aim of the instrument is to increase the involvement of the private sector in
funding important projects in EU crisis-hit countries. Part of the risk
associated with lending to banks will be covered, in collaboration with the
European Commission (EC) and the European Investment Bank, in order to maintain
the involvement of private investors in implementing cohesion policy programmes.
Countries eligible for support are Ireland, Greece, Portugal and Romania. These
Member States can transfer part of their allocation of EU regional funding to
the EC to use in the risk-sharing scheme. The EC then concludes a risk-sharing
partnership with the European Investment Bank, with the aim of encouraging
private investors to back projects partly funded by the European Regional
Development Fund and Cohesion Fund. Risk-sharing will not result in any change
in the overall allocation under cohesion funding for 2007-2013.
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Friday, April 20, 2012
Risk sharing: an effective anti-crisis instrument.
Strasbourg, 19 April 2012 - "The sooner we
put into operation risk-sharing instruments, the quicker the recovery of
countries worst hit by the financial crisis, such as Greece," said Danuta
Hübner, Chairwoman of the Regional Development Committee in the European
Parliament and author of a report on risk-sharing instruments adopted today in
plenary...."Austerity packages in economies most strongly hit by the
crisis have not generated growth because of dysfunctional banking sectors and
high risk aversion. There is an urgent need therefore to unlock EIB loans and
guarantees to enable private sector involvement in important growth and
jobs-creating projects, especially those co-financed by EU cohesion policy. And
this is what the risk-sharing instrument is about," said Danuta Hübner MEP. The
aim of the instrument is to increase the involvement of the private sector in
funding important projects in EU crisis-hit countries. Part of the risk
associated with lending to banks will be covered, in collaboration with the
European Commission (EC) and the European Investment Bank, in order to maintain
the involvement of private investors in implementing cohesion policy programmes.
Countries eligible for support are Ireland, Greece, Portugal and Romania. These
Member States can transfer part of their allocation of EU regional funding to
the EC to use in the risk-sharing scheme. The EC then concludes a risk-sharing
partnership with the European Investment Bank, with the aim of encouraging
private investors to back projects partly funded by the European Regional
Development Fund and Cohesion Fund. Risk-sharing will not result in any change
in the overall allocation under cohesion funding for 2007-2013.
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Professor Hans-Werner Sinn, head of Germany's IFO Institute, said German taxpayers are facing a dangerous rise in credit risk from a plethora of bail-out schemes. "The euro-system is near explosion," he told Austria's Economics Academy on Thursday.
Dr Sinn said Germany is on the hook for much of the €2.1 trillion (£1.72 trillion) in rescue measures for EMU debtors - often by the back-door - that will saddle Germans with ruinous losses one day.
"It is a horror scenario," he said, warning that the euro system is splitting friendly countries into blocs of mutually hostile creditors and debtors, exactly the opposite of what was hoped.
Earlier this week, the Foundation for Family Business in Munich filed a criminal lawsuit against the Bundesbank, accusing the board of disguising the true scale of risk born by German citizens.
The furore follows a sharp jump in the Bundesbank's "Target2" claims within the European Central Bank's internal payment network from €547bn in February to €616bn in March. Bundesbank claims have risen sixfold since 2008, a rise mirrored in Holland and Luxembourg.
There should be no cap on Target accounts, and Target accounts should not be settled each year, because Ireland would then have to repay a debt of 150 billion euros, as much as the Irish GDP (Whelan).
Sinn "We understand of course that Ireland would have a huge problem if our proposal were implemented. Clearly, we cannot ask Ireland to repay its Target debt immediately. However, all debts need to be repaid or at least be serviced such that Ireland’s debt-to-GDP ratio, including its Target debt, returns to reasonable levels".
But how do you do that when the countries banks are being asked to deleveage and are not lending to the real economy and a Fiscal Compact is being put in front of the Irish people who's government strangely only want to sign it because it will give them access to ESM funds and even more debt.
The whole thing is a bunch of riddles that only make sense from the perspective of the joker countries making up their own rules or printing their own money through ELA emergency liquidity assistance i.e. home grown quantitative easing by national Central Banks
Has euroscepticism descended into soap opera?
Is it no more than a collection of waffle, tittle tattle, gossip and wildly exaggerated predictions of apocalypse and armageddon, which fail to materialise, from the swivel eyed, headbangers on the fringes of euroscepticism?
Just how long can eurosceptics go on crying wolf?
"The German says to the Greek: “Do you still have all your marbles in place? You don’t expect me to transfer my money to a Greek bank so that you can transfer your money out of Greece; do you?”"
Very amusing and quite absurd. But, in the current panic we can expect such 'official transfers' in the fray.
I think that blogger makes a very good point, which is that if Target2 balances had to be collateralised, then they would fairly quickly be resolved. Eventually the member statres with negative target2 balances would run short of collateral, which would bring them back under ECB control.
It seems to me that the target2 system is acting as a huge loophole in the normal disciplines of the Euro. We usually say that one discipline of the Euro is that member countries don't control their own money supply, but if they can create negative Target2 balances without limit, then maybe they do, after all
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