Geting closer to the Ribbentrop - Molotov Pact implemetation ..!!!

PARIS—France and Germany were moving closer on a comprehensive package to stabilize the euro zone that would bolster the firepower of the bloc's rescue fund and strengthen the region's banks, the countries' finance ministers said Friday, though officials cautioned they were still working on many of the details. French and German finance ministers Friday said they have made progress on delivering a comprehensive package to stabilize the euro zone. Meanwhile the cost of the collateral Greece is expected to provide its creditors has zoomed up. Charles Forelle reports live from Paris. Finance ministers and central-bank chiefs from the Group of 20 leading nations were meeting here Friday and Saturday, with the threat the euro zone's crisis poses to the rest of the world economy and financial system dominating discussions. France's President Nicolas Sarkozy gestures at Germany's Finance Minister Wolfgang Sch??uble after a meeting at the Elys??e Palace in Paris. Meeting ahead of that gathering, French Finance Minister François Baroin and his German counterpart Wolfgang Schäuble said the two governments have developed specific agreements to present to other European countries at a summit in Brussels on Oct. 23. The package—first promised by German Chancellor Angela Merkel and French President Nicolas Sarkozy last Sunday—includes maximizing the force of the euro zone's bailout fund and finding a solution for Greece's debts. "We also made progress on the shared plan to recapitalize banks," Mr. Baroin told reporters after a meeting with Messrs. Schäuble and Sarkozy. As Portugal announces further austerity cuts and Spain experiences another ratings cut, G-20 finance ministers talk to the IMF about a possible role in the euro-zone crisis. France and Germany hold the key to resolving the biggest question hanging over global financial markets: how to boost the European Financial Stability Facility's firepower without requiring nations to contribute further funding or guarantees. According to a European Union official familiar with the situation, Germany and France are weighing two models but leaning towards using the fund to insure bonds from euro-zone countries.

Concerns that governments are less likely to come to the rescue of financial institutions prompted Fitch credit ratings agency to downgrade its outlook for Britain's Royal Bank of Scotland Group PLC, Lloyds Banking Group and Swiss lender UBS AG on Thursday. Fitch also said it is reviewing the ratings of a host of European lenders, citing ongoing exposure to sovereign-debt in peripheral Europe and sluggish economic growth prospects. The costs of additional bank regulation and political pressure to reduce state support for banks continue to pose challenges to lenders, Fitch said. Fitch is the second major credit rating agency in less than a week to slash its ratings of Royal Bank of Scotland and Lloyds. Last week, Moody's cut its ratings on the two U.K. banks for the same reason. The moves follow similar actions taken against Italian lenders. Fitch also put Barclays on notice for a possible downgrade, but the British arms of HSBC PLC and Spain's Banco Santander SA were unaffected. France's BNP Paribas and Societe Generale were also put on negative ratings watches, along with Credit Suisse, Deutsche Bank and Rabobank. U.S.-based Morgan Stanley and Goldman Sachs rounded out the banks put on negative ratings watch. Fitch said it expects to make a decision on possible ratings downgrades "within a short time frame and take corresponding rating actions where warranted." At least 66 of Europe’s biggest banks would fail a revised European Union stress test and need to raise about 220 billion euros ($302.3 billion) of capital, Credit Suisse AG analysts said. Royal Bank of Scotland Group Plc, Deutsche Bank AG and BNP Paribas SA would need to the most, a combined total of about 47 billion euros, analysts led by Carla Antunes-Silva wrote in a note to clients today. Societe Generale SA and Barclays Plc would each need about 13 billion euros of fresh capital. Eight banks out of the 90 tested failed the European Banking Authority’s July 15 stress test, with a combined capital shortfall of 2.5 billion euros.

The European debt crisis involves a type of investment long considered to be one of the soundest available -- government bonds issued by European countries. It is a situation which has taken politicians by surprise as well, as can be seen by existing regulations regarding the assessment of risk posed by sovereign bond investments. When determining how much equity capital banks need as a buffer, the risk of financial loss associated with government bonds is considered to be zero. In the middle of the year, many banks were already forced to write off 21 percent of their Greek bonds due to the impending debt reduction, known as a "haircut." That, though, likely won't be enough. Greek bonds may soon lose half their value -- if not more. German financial institutions would likely be able to absorb such losses. The country's 13 largest banks have reduced their Greece-related risks to €5.6 billion. But what if other European countries are affected by the turmoil? Currently, Italian and Portuguese government bonds are only being traded at a steep discount. If Greece were to default on its loans, the market value of these bonds would plummet even further. US investment bank JP Morgan suggests a scenario in which Greek bonds have to be written down by 60 percent, Portuguese and Irish bonds by 40 percent and Italian and Spanish bonds by 20 percent on bank balance sheets. Due to these write downs alone, JP Morgan says that European banks require an extra €54 billion. Analysts at Morgan Stanley even recommend up to €150 billion more in capital.

To recap: In July, European leaders crafted the fund (technically, the European Financial Stability Facility or EFSF) as a $588 billion rescue fund to prop up Greece and other nations that are bankrupt in reality — if not in public. Of course, it isn’t just the governments which will need rescuing. It is also all the other institutions that made loans to Greece & Co. When (not if) the default happens, a lot of already shaky banks will have much more debt than they do assets. Investors and depositors will then act on the fact that those institutions are not a good place to keep their money. The banks that loaned to the banks that loaned to Greece will also have more debt and people will worry about those banks. This will worry the banks that loaned to the banks that loaned to the banks to fund the mess that Greece built. The EFSF is supposed to be that something. The theory is that it will do this by providing money to a lot of those governments and institutions

Speaking at the European Parliament in Brussels, Mr Barroso called for EU leaders to back his plan that would bring forward the introduction of a permanent rescue mechanism for states from mid-2012 to mid-2013 and would see more rigourous capital standards for banks. "For confidence to return we need to fix the sovereign debt problem, which can only be done through a coherent package and we must therefore urgently strengthen the banks, because, in fact, those two issues are now, whether we like it or not, linked. "This must be co-ordinated through the member states, the European Banking Authority, the ECB and the Commission," Mr Barroso said. Mr Barroso hopes that EU leaders will back the plan when they meet at a summit in Brussels on October 23. Officials say that the Commission, the EU's executive, sees this as the final opportunity to get a grip on the debt crisis, which has already forced three states into multi-billion euro bailouts and now threatens to push the world economy into a second recession.

Euro fear as Spain and Italy's debt ratings are downgradedBritish banks and building societies lose rating while pressure mounts on EU to restore faith in single currencyThe eurozone crisis intensified on Friday when Spain and Italy were downgraded by the ratings agency Fitch, heightening fears over the health of Europe's banks. Fitch's move came at the end of a day which had already seen 12 UK banks and building societies downgraded by the rival agency Moody's and amid speculation about co-ordinated European action to bolster the finances of the continent's banks by next weekend. The euro fell against most major currencies, piling fresh pressure on European politicians to restore confidence in the single currency. Germany's Angela Merkel said Europe needed to find a solution for its banks by 17 October. Analysts from Capital Economics estimate the total financial package may top €200bn (£172bn). Merkel and Nicolas Sarkozy of France are due to meet in Berlin on Sunday to discuss the crisis, with bank recapitalisation expected to be at the heart of their negotiations.

Fitch Ratings on Friday issued twin cuts to two of the euro zone's largest economies as it downgraded its foreign and local currency ratings on Italy and Spain. The cut on Italy—to A-plus from double-A-minus—leaves the ratings four steps down from the coveted triple-A designation. The outlook is negative. Alongside a broader debt crisis sweeping the euro zone, Fitch noted that Italy's high level of public debt and low rate of potential growth renders the regions' third-largest economy especially vulnerable to external shocks. On Tuesday, Moody's Investors Service slashed Italy's government bond ratings by three notches, citing a fragile market mood and mounting political uncertainty that could make raising debt more difficult. In a statement, the Italian government said the downgrade by Fitch was expected and "above all a reflex of an uncertain climate that is sweeping the euro zone." Pointing to Spain, Fitch lowered its foreign and local currency ratings two notches to double-A-minus from double-A-plus, pushing the ratings three steps down from triple-A. As cause for the cut, Fitch also cited an intensifying euro-zone crisis, adding that the firm expects Spain's annual economic growth to remain below 2% through 2015 and unemployment to remain high. Meanwhile, Fitch said its ratings on Portugal remain on watch for downgrade, and it intends to resolve its review in the fourth quarter, The review will look at the country's 2012 budget, risks to the banking system and its medium-term economic and fiscal prospects, among other things. Its foreign-currency rating is currently triple-B-minus, which is the lowest level of investment-grade territory.

London, 07 October 2011 -- Moody's Investors Service has today downgraded the senior debt and deposit ratings of 12 UK financial institutions and confirmed the ratings of 1 institution. This concludes its review of systemic support assumptions from the UK government for these institutions initiated on 24 May 2011. The downgrades have been caused by Moody's reassessment of the support environment in the UK which has resulted in the removal of systemic support for 7 smaller institutions and the reduction of systemic support by one to three notches for 5 larger, more systemically important financial institutions. According to Moody's, announcements made, as well as actions already taken by UK authorities have significantly reduced the predictability of support over the medium to long-term. Moody's believes that the government is likely to continue to provide some level of support to systemically important financial institutions, which continue to incorporate up to three notches of uplift. However, it is more likely now to allow smaller institutions to fail if they become financially troubled. The downgrades do not reflect a deterioration in the financial strength of the banking system or that of the government.The rating actions include a one-notch downgrade of Lloyds TSB Bank plc (to A1 from Aa3), Santander UK plc (to A1 from Aa3), Co-Operative Bank plc (to A3 from A2), a two-notch downgrade of RBS plc (to A2 from Aa3) and Nationwide Building Society (to A2 from Aa3); and downgrades of one to five notches of 7 smaller building societies. The ratings of Clydesdale Bank were confirmed at A2 (negative outlook).

As outlined in the May press release, we have reviewed the standalone ratings of all entities prior to concluding on the debt ratings. A separate announcement today covers the upgrade of the standalone rating of Co-Operative Bank to C- (mapping to Baa1 on the long-term debt scale) from D+ and earlier announcements cover the upgrades of the standalone ratings of Santander UK, Nationwide, Yorkshire, and Principality Building Societies. A detailed summary of the rating actions and the current levels of systemic support for UK financial institutions is available here http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_136526.
Separate announcements will follow on entities included in the May 24th review, but not concluded in this action: this includes certain subsidiaries of RBS and Lloyds, as well as Bank of Ireland (UK).

For Britain's banks, the perception that European banks are weak and too exposed to sovereign debt is a bigger problem than a Moody's downgrade, says the BBC's business editor, Robert Peston. He writes: The UK banks' downgrade is an inevitable consequence of government policy to reduce the likelihood that they would be bailed out in a crisis - of which the most conspicuous manifestation has been the Vickers' commission recommendations to put retail banks behind a ring fence and make creditors to banks explicitly liable to losses. The important point, for today however, is that these downgrades have been anticipated and discounted by the market for some time, so their real economic impact on the affected banks should be negligible. Mr Peston also gives an interesting run-through of how much capital European banks, including RBS, Lloyds and Barclays, would have to raise under a new set of stress tests, based on figures from French bank Natixis. If RBS was obliged to raise fresh capital, the government would be caught between a rock and a hard place, he writes. The bank has the right to sell new shares to the government at 50p (vs. a 23.5p share price now) under the terms of its previous bailout. This would obviously incur a loss for taxpayers. But the alternative would be the Government fully nationalising RBS... Lloyds has also responded to the Moody's ratings cut on the debt of 12 UK banks this morning. They are also playing down the move.

Eurozone finance ministers have put off until next month any decision to give the green light for a further €8bn bailout for Greece despite recognising that the Athens government had made some considerable progress in slashing the country's debts. Jean-Claude Juncker, Eurogroup chairman, repeatedly made plain early on Tuesday that none of the eurozone countries was urging a Greek default and categorically denied that there was any question of Greece leaving the euro area. In a move certain to disappoint markets, the 17 finance ministers sent signals they had no intention of agreeing to reboot the zone's rescue fund of €440bn closer to the €2tn or more demanded by leading investors and analysts. EU officials reiterated that there was "no Plan B". But Juncker and Olli Rehn, the EU economic and monetary affairs commissioner, indicated that ministers had for the first time discussed measures to improve the bailout fund's efficiency and effectiveness in order to raise its firepower – code for raising the guarantees it needs for buying up more government bonds in the secondary market. Juncker said: "We consider that we should by no means increase the fund's financial volume." He dropped a broad hint that private bondholders would be forced to pay more than the 21% "haircut" agreed at the 21 July meeting that increased the fund's volume and approved the second €109bn bailout for Greece – ascribing that to "technical" reasons. Juncker and Rehn recognised Greece had made strides towards overcoming its debts and budget deficit but said that the Athens government had to be stricter about structural reforms and more ambitious in implementing privatisations.

Ireland's central bank reportedly is printing Ireland's old currency in case the country leaves the eurozone. At least that's the rumor circulating in Dublin, notes Alan McQuaid, chief economist at Bloxham stockbrokers in that city. McQuaid, writing a guest commentary for The Guardian, says he's not sure if the rumor is true. But he does hope Ireland has contingency plans in case the euro disintegrates. Then again, given the record of European leaders, a lack of backup plan wouldn’t be surprising. As Greece struggles to remain solvent, the European monetary union is scrambling to stop the debt crisis from spreading. If the crisis does spread, Ireland might be next in line. Some pundits say Ireland should drop the euro. Being master of your own destiny does have appeal, McQuaid admits. If it returned to the punt, Ireland could boost exports by devaluing the currency and reduce its debt burden.

German finance minister Wolfgang Schauble said it would be a folly to boost the EU's bail-out machinery (EFSF) beyond its €440bn lending limit by deploying leverage to up to €2 trillion, perhaps by raising funds from the European Central Bank. "I don't understand how anyone in the European Commission can have such a stupid idea. The result would be to endanger the AAA sovereign debt ratings of other member states. It makes no sense," he said. Mr Schauble told Washington to mind its own businesss after President Barack Obama rebuked EU leaders for failing to recapitalise banks and allowing the debt crisis to escalate to the point where it is "scaring the world". "It's always much easier to give advice to others than to decide for yourself. I am well prepared to give advice to the US government," he said. The comments risk irritating the White House. US Treasury Secretary Tim Geithner has been a key driver of plans to give the EFSF enough firepower to shore up Italy and Spain, fearing a drift into "cascading default, bank runs and catastrophic risk" without dramatic action. Markets across the world ignored the mixed signals about the true scope of EU rescue measures, convinced that EU leaders have a "grand plan" up their sleeves and will unveil the details after the Bundestag has voted on Thursday on the earlier July deal to revamp the fund. France's CAC-40 surged by 5.7pc, led by a 17pc rise for Societe Generale. Germany's Dax was up 5.3pc. The FTSE 100 jumped 4pc in London, the biggest one-day rise this year. Oil jumped almost $4 in New York to $88 a barrel. In Berlin, Chancellor Angela Merkel was fighting for her political life as the rump of lawmakers from her coalition vowed to reject the EFSF package, though the latest tally suggests she may squeeze by with her own majority. Angry dissidents suspect that secret plans are being withheld until after the vote.

Here's a few events to watch out for today:

• Spain and Italy to auction government debt - this morning
• Greek PM George Papandreou addresses a conference for the Federation of German Industries - this morning, Berlin
• CBI Distributive Trades Survey (measuring UK retail sales in September): 11am
• Greek property tax vote - 7pm CET, Athens
• Papandreou/Merkel "working dinner" - evening, Berlin

The trouble is the EU is run by unelected commissioners, the MEP's are just front men, window dressing to give the appearance of democracy. Have you not noticed how everything is impossed on us without debate? Even when stuff goes to national parliaments, it just gets nodded through, no one reads whats in front of them, thats the reason why every regulation fills thousands of pages! - While the eurozone was the focus of financial market fears about debt-strained countries, the problem was actually wider spread. "We have in front of us a global crisis of sovereign risk and we [the eurozone] are the epicenter of this global crisis," he said. He added that the current situation was more precarious than when Lehman Brothers collapsed and sent the global economy into a tailspin in late 2008, as there was no longer the belief in markets that key countries would not default on their debts. He also urged authorities to take decisive action to stem the current troubles, claiming that the risk to the eurozone financial system is growing. "Risks to the stability of the EU financial system have increased considerably," he said in a speech to the Bretton Woods committee in Washington, on the sidelines of the annual IMF meeting.

“Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it.

The U.S. and Europe can do nothing to steer their economies from falling into recession, says New York University economist Nouriel Roubini. A look at his Twitter page shows Roubini, famous for accurately predicting the severity of the recent recession well before it happened, has abandoned all hope for avoiding double-dipping back into economic contraction. "Economy already in recession. Whatever the Fed does now is too little, too late," Roubini tweets. Forecasts are bleak even among those who believe the U.S. economy is not contracting. Blackstone Chief Operating Officer Tony James puts the odds of a double-dip recession at one in three. Even if the economy technically avoids a recession, defined as two consecutive quarters of economic contraction, weak growth will make it feel like a recession for many, he says. "One percent growth is going to feel like a recession for most of America," James tells CNBC. That means weak economic growth and high unemployment may remain the norm for years. "What has happened is that the recovery we were experiencing in 2010 has basically stalled out," Jerry Nickelsburg, senior economist at UCLA Anderson, tells the Ventura County Star. "We're moving sideways. Consumers are being more frugal, squeezed by high gasoline prices and nervous about the turmoil in the financial markets."
He said today’s economy could be as good as it gets for some time. "Slow economic growth and high unemployment mean times are not going to be good for a while," Nickelsburg says. Big multilateral organizations like the World Bank are getting worried as well. "We’re getting closer to the risks of double dip," World Bank President Robert Zoellick tells Bloomberg. "I still wouldn’t predict it, but it really depends on how the risks coming out of Europe are managed."

"The Eurozone will survive" says Fitch..."The issue was never in doubt" . Never in the history of propaganda have so many words been wasted to so little effect.

Why not just abandon the mistake and revert to national currencies. If managed properly it should not be disastrous, but just a money changing exercise, which puts right the daft notion of a common currency in the current situation. They changed to the euro quite simply so change back quite simply and let the drachma etc. float. Debts will still remain but national economies will adjust. The E.U. dinosaur will not like it, but when you make a mistake instead of trying to fudge a solution it is better in the long run to face reality.
The next step is to revert the E.U. to the common market and the ECU and forget federalization and the human rights act, both of which hinder progress and national ambitions. I believe the above would receive the whole-hearted support of the European nations.

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.

Fears of a deepening of Europe's debt crisis have prompted the world's leading central banks to pump US dollars into the financial system, in a co-ordinated action designed to boost market confidence. The Bank of England joined the US Federal Reserve, the European Central Bank, the Swiss National Bank and the Bank of Japan on Thursday to announce that they would flood money markets with dollars over the coming months.

Amid the deepening euro-zone crisis, Moody's downgraded the credit rating of both Société Générale and Crédit Agricole, two of France's largest banks, over concerns that they hold insufficient capital to withstand a Greek default. BNP Paribas, France's biggest bank, denied reports that it was having trouble raising funds in the markets. French officials insisted that the country's financial sector was sound and did not need a further injection of capital from the government.

Why do they always say that ? - if the eurozone breaks up, the EU will not survive? The EU did just fine before the euro hit the scene.
And check this out: "Without the EU,...Mr Rostowski predicted there could be a new war within a generation." So they give the EU all the credit for avoiding war on the European continent over the last 70 years. But correlation does not imply causation, does it? 70 years is really not a very long time, is it? The European peace of the last 70 years could more plausibly be attributed to the vibrant postwar economic environment, to the presence of a large, dangerous and nearby enemy (USSR) and to many other factors, rather than the Brussels bureaucracy. In a continent of free speech, one might be allowed to allege that Eurokrats would rather see half the Greek population destitute before they themselves might be forced to work to retirement rather than cash in on the pig trough stuffed with European sinecures. Let us please hope that this madness ends soon and that the populations of Europe begin to realize that it is just not sustainable.

About the E.U. ? I'm afraid that the only way we will see the end of the euro & the final flourish of the eu is through market forces! The members of that corrupt organisation will fight tooth & nail to protect their ivory towers. We will never see any united statement that they have failed only a continuing, pathetic stream of comments on european unity both politically & economically! Put this stinking corrupt organisation out of its misery & kill it dead!

Investors flooded into the safe arms of German bonds Monday, and European banks dialed back lending to their riskier peers, in a clear sign that fears of a destabilizing collapse in Greece persist despite fresh efforts over the weekend to shore up the troubled country's finances. The alarm sounded across Europe's beleaguered periphery. Early in the day, Italy paid a steep price to issue short-term treasury bills, borrowing for three months at the same rate the U.S. commands for 10 years. Bond yields in Spain and Portugal rose, too. Greek bonds were at panic levels: more than 20% for 10-year lending and 75% for two, though few buyers were willing to take the plunge. The big mistake by design (Germany is also in dire straights - it is NOT a strong economy since it has no assets or resources) -German government-bond yields meanwhile fell to record lows—1.72% for 10-year bonds—as investors sought the security of the Continent's strongest economy. The action was a disquieting response to a furious bid by Greece to raise fresh cash. Sunday, the country's finance minister outlined a plan to cover a €2 billion ($2.73 billion) shortfall with a special property tax—to be collected on property owners' electric bills, the better to be assured it is actually paid.

The FTSE 100 closed down 2.35pc, the Dax in Frankfurt fell 4.04pc, and the CAC in Paris was down 3.6pc following the news that Mr Stark, the top German official at the ECB, was leaving due to "personal reasons". Sources said his departure reflected a deep rift at the heart of the ECB, with Mr Stark opposed to the bank's policy of buying eurozone bonds to support highly indebted countries like Italy and Spain. Mr Stark was considered to be a hawk at the bank, favoring looser monetary policy including higher interest rates. The news came amid clear divisions in the G7 ahead of the two-day meeting, which began on Friday. Before arriving in Marseilles, Chancellor George Osborne was adamant that he would not waver from his austerity plan. "Britain will stick to the deficit plan we've set out," he said. However, Christine Lagarde, the head of the International Monetary Fund, said that policymakers in advanced economies should use all available tools to boost growth as the world economy entered a "dangerous new phase". Speaking alongside the Chancellor at Chatham House, she said that while Britain's £110bn deficit reduction plan was "appropriate", policymakers should be "nimble." An EU official in Marseilles admitted that Mr Stark's resignation was unhelpful: "People weren't expecting this and the timing is bad," he said. Joshua Raymond, chief market strategist at City Index, took a similar line: "[Stark's departure] escalates investor fears that Europe's leaders and central bankers are far from united in ideology at a time when the markets need to see credible and definitive action to prevent the sovereign debt crisis from sending European economies back into recession." Just hours after his resignation, Mr Stark called for drastic reforms to strengthen economic governance of the euro zone. He said that a "quantum leap" is necessary "at the European level" to reinforce its institutions. He added that "a large reform of decision-making mechanisms and sanctions" is necessary in order to secure in the future effective coordination of economic and fiscal policies of the euro zone countries. "We find ourselves in a situation where risks to public budgets undermine financial stability," wrote Stark.