FRANKFURT—A top European Central Bank official said the ECB could make asset purchases if needed, as euro-zone policy makers increasingly float the prospect of deploying a tool that is commonly used by other major central banks but stirs deep divisions in Europe. The comments, by ECB Vice President Vitor Constâncio, are the latest in a string of assurances by top officials at the central bank that it still has an array of policy options in its arsenal, even after reducing interest rates to record lows earlier this month. Recent ECB references to the idea of asset purchases, known as quantitative easing, are "only as a possibility and nothing else. Everything is possible. That was what Peter Praet said," Mr. Constâncio told reporters on the sidelines of the 16th annual Euro Finance Week in Frankfurt."If our mandate is at risk we are going to take all the measures that we think we should take to fulfill that mandate," Mr. Praet, who also heads the ECB's powerful economics division, said in the interview last week. "The balance-sheet capacity of the central bank can also be used," he added. "This includes outright purchases that any central bank can do."The officials gave no indication that such a policy is under serious consideration now. Mr. Praet said in the interview that inflation risks are balanced after the ECB's rate cut, which brought its main policy rate to 0.25%. Mr. Constâncio on Tuesday said the ECB hasn't discussed how it would conduct quantitative easing technically. The euro largely shrugged off his comments.Still, simply raising the idea of quantitative easing marks a significant shift in rhetoric from the central bank. ECB President Mario Draghi sidestepped a question about the policy at his monthly news conference on Nov. 7, saying only that the ECB had "a whole range of instruments" that could be activated before hitting the floor on interest rates. It is "remarkable how the attitude of some ECB Governing Council members toward [quantitative easing] has changed," BNP Paribas BNP.FR +0.41%BNP Paribas S.A.France: Paris ^€54.01 +0.22+0.41% Nov. 20, 2013 10:29 am Volume : 575,621 P/E Ratio 12.83Market Cap€68.13 Billion Dividend Yield 2.78% Rev. per Employee €155,68211/13/13 BNP Paribas SA Buys Belgium's ...10/31/13 BNP Paribas's Interesting Lack...10/31/13 BNP Paribas Profit Rises Despi...More quote details and news »BNP.FR inYour ValueYour Change Short position economist Ken Wattret said in a research note. "What was once a taboo, then a last resort is now an option under consideration."

FRANKFURT--The European Central Bank will force the euro zone's largest banks to set aside 8% of their risk-adjusted assets as a capital buffer, which will form one plank of the ECB's assessment of bank balance sheets next year, according to a person familiar with the matter. Euro-zone banks, which will be supervised by the ECB starting at the end of next year, will be required to hold a 7% capital buffer. The region's most significant banks will have to hold an additional percentage point, the person said. The buffers protect banks against losses they may take on loans and other assets. An ECB spokesman declined to comment.

The target of 7% is in line with what a bank has to achieve under the new "Basel III" rules on capital in order to pay its dividends and bonuses without restrictions. However, it's lower than the 9% required by the capital exercise that the European Banking Authority carried out over 2011-2012. Theoretically, the new Basel standards don't come into force until 2018, but pressure from both regulators and financial markets has led most banks to report under the new standards already. The one percentage point surcharge for 'significant' banks echoes the Financial Stability Board's intention to impose a capital surcharge of up to 3.5 percentage points for Systemically Important Financial Institutions--also known as banks that are 'too big to fail.' The FSB will phase in these surcharges between 2016-2019. According to its latest assessments, Deutsche Bank AG (DBK.XE) would be liable to a surcharge of 2.5 percentage points, with a dozen other EU banks being subject to surcharges of between one and two percentage points. However, it isn't clear how the ECB will define its list of significant banks.

The ECB will release additional details on how it will handle its asset quality review at a press conference Wednesday. Europe's central bank will conduct the review in the first half of next year, before it takes on the role of bank supervisor. Currently, banks across the 17-member currency bloc are overseen by national regulators. The review is seen by most analysts as a critical part of efforts by European officials to address capital needs of banks, particularly in southern Europe, and to spur new lending to the private sector.

ECB - Troubled bank balance sheets ...

Troubled bank balance sheets had the potential to “choke the engine of recovery” in the 17-nation bloc, and “exert a more persistent drag on economic growth,” said Mr Coeuré, who sits on the executive board of the European Central Bank (ECB). Mr Coeuré said ailing banks had to be repaired or shut down. Failure to do so could result in a decade of stagnant growth in the eurozone, similar to Japan in the 1990s. He said the eurozone crisis risked creating a Japanese-style wave of “zombie banks” in which lenders, fearful of falling foul of capital rules, chose to “evergreen” - or roll over - bad loans instead of recognizing losses on their books. This had led to the “perverse” practice of banks extending credit to insolvent borrowers, rather than lend to creditworthy firms, said Mr Coeuré. Banks then “gambl[ed] on the hope that [firms] would recover or that the government would bail them out”. Mr Coeuré called on leaders to complete the steps needed to implement the eurozone’s banking union. He also said measures were needed to tackle youth unemployment...

Meanwhile, Olli Rehn, an incompetent idiot, the European commissioner for economic and monetary affairs, said the next tranche of Greece’s bail-out could be paid in installments amid growing frustration with Athens’ slow pace of reform.

“It is possible, but not certain,” Mr Rehn said on Friday. “It all depends on whether Greece can meet all requirements that they are committed to.”  A separate report by the European Commission and the ECB showed that Spain’s troubled lenders did not need further taxpayer support. The eurozone’s fourth largest economy has so far received €41.3bn to recapitalize its banks....

German politicians have been vocal in their opposition to the EU Commission's plans for a single bank resolution authority, concerned that it could override a national decision on how to deal with a struggling bank. Yesterday finance minister Wolfgang Schaeuble warned that the plans could require treaty change. I would strongly ask the commission in its proposal for a [single resolution mechanism] to be very careful, and to stick to the limited interpretation of the given treaty.  We have to stick to the given legal basis, as otherwise we risk major turbulence.  More on the plans for the so-called "single resolution mechanism" to be proposed by the EU Commission today.  If plans go ahead at the planned pace, a new agency within the European Central Bank will be in charge of the wind-down or rescue of failed banks by 2015. The eventual aim is for the ECB to draw from a common multibillion euro fund, supplied by eurozone banks. However, since it will take years to accumulate the €60bn needed for a bank resolution fund, it will be limited to overseeing national-level bank bail-outs to begin with.

 

TARGET2 - Legal base - A Decision of the ECB of 24 July 2007 concerning the terms and conditions of TARGET2-ECB (ECB/2007/7)

The Governing Council of the ECB decided to legally construct  a multiple system with the highest degree of harmonization of the legal documentation used by the central banks within the constraints of their respective national legal framework, named TARGET2.  All ECB legal acts related to TARGET2 can be found on a dedicated website. TARGET2 is the real-time gross settlement (RTGS) system owned and operated by the Euro system. TARGET stands for Trans-European Automated Real-time Gross settlement Express Transfer system. TARGET2 is the second generation of TARGET. Payment transactions are settled one by one on a continuous basis in central bank money with immediate finality. There is no upper or lower limit on the value of payments. TARGET2 mainly settles operations of monetary policy and money market operations. TARGET2 has to be used for all payments involving the Euro system, as well as for the settlement of operations of all large-value net settlement systems and securities settlement systems handling the euro.  TARGET2 is operated on a single technical platform. The business relationships are established between the TARGET2 users and their National Central Bank. In terms of the value processed, TARGET2 is one of the largest payment systems in the world.

• TARGET2 had 999 direct participants, 3,386 indirect participants and 13,313 correspondents;
• TARGET2 settled the cash positions of 82 ancillary systems;
• TARGET2 processed a daily average of 354,185 payments, representing a daily average value of €2,477 billion;
• the average value of a TARGET2 transaction was €7,1 million;
• two-thirds of all TARGET2 payments (i.e. 68%) had a value of less than €50,000 each; 11% of all payments had value of over 1 EUR million each;
• the peak in volume turnover was 29 June 2012 with 536,524 transactions and peak value turnover was on 1 March 2012 with €3,718 billion;
• TARGET2’s share in total large-value payment system traffic in euro was 92% in value terms and 58% in volume terms;
• the SSP technical availability was 100%;
• 99.98% of TARGET2 payments were processed in less than five minutes.

Just a thought :

Europe just went through a debt crisis that was entirely avoidable. Iceland showed us the way in 2008, no sovereign debt crisis there.

Unemployment below 5%, 7 consecutive quarters of growth averaging 2.5% per annum as of January this year. More GDP growth than other Nordic countries.

No wonder the rest of Europe is disillusioned. People are fed up with paying through the nose for debts that don't belong to them.

The burden of banking debts is tearing apart social cohesion.

The EU is dead in the water....

The EU is dead in the water already, the Euro and Eurozone even more so. Or perhaps you think the whole mad caboodle is a roaring success, and on an ever-upwards curve? Who cares when it finally unravels - it will, by its nature, never be a success in the future, because its structure and aims are stuck in the past in a fast-changing world. UKIP were top in the EU elections, and have gained significant success in the polls ever since the last General Election, so much so that they are challenging the Limp Dicks for third place. Most Conservatives agree privately with UKIP, and significant numbers have deserted to UKIP, so much so that the Conservatives cannot possibly win the next General Election without UKIP aid or without adopting UKIP policies in a significant fashion. There's a message for you there, chum. There is a great irony here that the steps taken in order to prevent a deflationary collapse could mean there is an even greater "danger" if we do start to recover. Put simply, the debt burden of the major economies are so large that they cannot afford to pay higher rates. The central banks, have massive rate risk through the bonds they are holding. What we are trying to do is create via financial alchemy a solution to the problem that the debtors cannot pay the creditors, but a restructuring is politically impossible as well as a mortal threat to undercapitalized banks. Therefore, we hope that we can somehow flood the world with liquidity, to inflate only specific assets (property, equities) but not others (food and energy). Because this is "unnatural" we see efforts made to manipulate markets (officially sanctioned fudges of housing data, outright equity market intervention, and rumors of oil releases) so the markets just get weirder every day. The question is, whether we are happy to live in a world of extreme central planning, which seems to benefit the ultra wealthy the most or would be prefer to stop the charade, allow the markets to clear, accept the reality that we are not as rich as we thought, but move on.

LONDON—Consumer prices in the 17-member euro zone rose at the fastest pace in almost three years, even as the economy slowed sharply, leaving the European Central Bank's rate setters to make a very tough call when they meet next week. The European Union's official statistics agency Eurostat Friday said consumer prices rose by 3% in the 12 months to September, up from 2.5% in August and well above the ECB's target of just below 2%. It was the fastest rise in prices since October 2008, and under normal circumstances the response from the ECB's 23-member governing council would be an immediate increase in its key interest rate. But these aren't normal times, and other data indicate the economy is slowing sharply as confidence evaporates in the face of the currency area's deepening fiscal crisis. A measure of activity compiled by the Centre for Economic Policy Research and the Bank of Italy, also released Friday, showed the economy grew at the slowest pace since the end of the recession in August 2009. The Eurocoin reading suggests growth slowed further in the third quarter, and is consistent with other timely measures of activity and leading indicators. Taken together, they suggest the ECB may soon have to reverse its April and July rate rises. Markit Economics last week said the purchasing-managers index for the euro zone fell to 49.2 in September from 50.7 in August, indicating the economy contracted. A survey of confidence released by the European Commission on Thursday recorded a sharp fall among manufacturers, service providers and other businesses, as well as consumers. The economic-sentiment indicator fell for the seventh straight month, to 95.0 from 98.4

Staple foods became 20 to 40% more expensive between July 2010 and February 2011, shows the Z.F. index calculated based on prices in Bucharest hypermarkets. ZF selected 15 products whose price it has been following since 2008, once every six months, at the same Bucharest hypermarkets, Carrefour Orhideea and Real Afi Cotroceni. These products were chosen because they are most often to be found in Romanians' purchase basket. (Z.F.)

In the calculation of this index, ZF chose one brand from each category of products, a brand that is well positioned in terms of market share, produced by one of the top-five players in the category. Therefore, one kilo of Băneasa flour costs 2.8 lei in February, 41.4% more than in July 2010. 1 Kilo of Lemarco sugar now costs 4.295 lei, compared with 3.28 lei, an increase of 30.9%. Similarly, the price of Floriol vegetable oil (1 litre) rose over 35%, from 5.11 lei to 6.91 lei. Data from the National Statistics Institute (INS) point to a 10.2% price increase for flour in the July 2010 - January 2011 period. Similarly, the increase amounted to 8.1% for sugar. The only products whose prices fell, of those analysed by ZF, were beer, mineral water, apples, with the decline amounting to 6.1%, 0.1% and 12.4% respectively.

The Romanian National Bank has a forex reserve nearly double as high as Romania's short-term external debt, and can be considered excessive when compared with that of other central banks in the region, after having received nearly 10 billion euros from the International Monetary Fund (IMF) in the past two years via an arrangement concluded precisely out of fear that the reserve may not be high enough to cover the debt in case of an external shock. The reserve became so big that, all of a sudden, the NBR decided it no longer wanted money from the IMF, so Romania will not draw the last 1 billion-euro instalment of the loan. In other words, the loan taken out proved to be bigger than needed, especially since 3.5 billion euros went straight into the budget instead of going into the NBR's reserve. But it is still the NBR who will have to pay back the money taken out from the IMF.
"As far as forex reserves are concerned, things have been good for some time. The reserves have been kept at this level in order to calm the financial markets, which had become too jittery," comments financial analyst Aurelian Dochia. He believes aside from the high level of forex reserves, the last instalment of the IMF loan was no longer important also because economic forecasts point to an economic improvement in 2011.
The NBR reserves amounted to around 35.9 billion euros at the end of January, which includes the 3.2 billion-euro value of the 103.7 tonnes of gold.

Real estate developers scheduled for delivery in 2011 at least eight retail projects in Romania totaling a surface of over 230,000 square meters, 17% more than the total area of projects completed in 2009, according to property analysts.

In 2009, developers completed retail projects totaling 195,000 sqm, according to CB Richard Ellis (CBRE) data.

Oradea Shopping City, Uvertura City Mall Botosani, Vitan Outlet Bucharest, Policolor Shopping Center Bucharest and Electroputere Shopping City Craiova are other projects scheduled for completion in 2011. Read more on http://www.mediafax.biz/. (Z.F.)euro, criza datoriilor de stat, euroscepticismul, monede nationale, renuntarea la euro, salvare euro, zona euro

Austria's Erste Bank has sold financial gold

BCR, the biggest domestic bank in terms of assets, is gearing up to enter the niche of gold sales to individuals, where only Greece's Piraeus is operating for the time being. Gold has this year brought a return of around 40% to investors, thus being one of the most profitable investments, just like in 2009, when it had climbed by 32%. Over the past two years, BCR, controlled by Austria's Erste Bank, has sold financial gold only to private banking clients, who have a greater financial power and are seeking ways to diversify their investments. Usually, the minimum quantity that had to be purchased stood at 5 kilos per deal, but smaller deliveries were also negotiated. As part of its new retail strategy, BCR is getting ready to sell gold bullion and coins issued by the Austrian Mint, starting from very small sizes, of just two grams, to one kilo. BCR will sell gold through certain selected branches, but Răzvan Furtună, head of the sales department of BCR Treasury, has not provided any further details for the time being.(Z.F.)euro, criza datoriilor de stat, euroscepticismul, monede nationale, renuntarea la euro, salvare euro, zona euro