Hungary pays off IMF debt, may eye EU exit

The International Monetary Fund (IMF) has approved a $17.1bn (£10.1bn) bailout for Ukraine to help the country's beleaguered economy. The loan comes amid heightened military and political tension between Ukraine and neighbouring Russia.

The loan is dependent on strict economic reforms, including raising taxes and energy prices.

The money will be released over two years, with the first instalment of $3.2bn available immediately.

The head of the IMF, Christine Lagarde, said the IMF would check regularly to ensure the Ukrainian government followed through on its commitments.

In March Ukraine put up gas prices by 50% in an effort to secure the bailout.

The government has also agreed to freeze the minimum wage.

The bailout had to be approved by the IMF's 24-member board, which includes a Russian representative.

The IMF loan will also unlock further funds worth $15bn from other donors, including the World Bank, EU, Canada and Japan.

Russian recession

In December last year, Ukraine agreed a $15bn bailout from Russia, but this was cancelled after protests forced out pro-Russian President Viktor Yanukovych....

The IMF bailout will also make available $1bn in loan guarantees from the US, which was recently approved by Congress.

"Today's final approval for the $17bn IMF programme marks a crucial milestone for Ukraine," said US Treasury Secretary Jacob Lew in a statement.

He added that the bailout will "enable Ukraine to build on the progress already achieved to overcome deep-seated economic challenges and help the country return to a path of economic stability and growth".
Earlier on Wednesday, an international conference in London ended with a commitment to help Ukraine recover tens of billions of dollars worth of assets which were allegedly stolen by the ousted President Yanukovych and his allies.

The IMF warned that Russia was "experiencing recession" because of damage caused by the Ukraine crisis.

The only hope for Italy is to leave the EuroZone now - otherwise = bankruptcy!

Thousands of workers and unemployed people marched in Rome on Saturday to protest against record unemployment and call on Enrico Letta's two-month-old government to deliver more than empty rhetoric on the issue.

The rally, organized by the country's three largest unions was the first major protest since Letta's broad, left-right coalition took office following an inconclusive election in February.

Italian unemployment rose to 12% in April, the highest level on record, and joblessness among people under 24 is at an all-time high above 40%.

Union chiefs, speaking before a flag-waving crowd estimated at more than 100,000 by the organizers, criticized Letta for what they called a lack of action on an urgent problem.

"We can't accept these continuous promises that aren't translated into decisions that give a change of direction," said Susanna Camusso, leader of the country's largest union CGIL.

Luigi Angeletti, head of the UIL, said the country could not afford the piecemeal approach to policy adopted so far, especially when the ruling coalition is so fragile...The unionists called on the government to intervene to prevent plans by white-goods manufacturer Indesit to lay off 1,400 workers in one of the most recent labor disputes....
Big deficits in time of recession are nothing new. They are not desirable, but calling them "dangerous" is ridiculous. The only way to reduce them is through growth, which isn't going to happen with taking so much money out of the economy. Growth has got its own problems, I don't think a society can run for ever on people/states buying stuff they don't really need with money they have really got, but the present "solution" isn't going to work. It is indiscriminate cutting, with no thought for the cost this "cutting" is storing up for the future. The present crew hasn't got the skills, imagination, intelligence to think out of their narrow ideology. They still think putting state services to tender to private businesses is going to solve all. It isn't....

Mediobanca, Italy’s second biggest bank, said its “index of solvency risk” for Italy was already flashing warning signs as the worldwide bond rout continued into a second week, pushing up borrowing costs.

“Time is running out fast,” said Mediobanca’s top analyst, Antonio Guglielmi, in a confidential client note. “The Italian macro situation has not improved over the last quarter, rather the contrary. Some 160 large corporates in Italy are now in special crisis administration.” The report warned that Italy will “inevitably end up in an EU bail-out request” over the next six months, unless it can count on low borrowing costs and a broader recovery. Emphasizing the gravity of the situation, it compared the crisis with when the country was blown out of the Exchange Rate Mechanism in 1992 despite drastic austerity measures.
Italy’s €2.1 trillion (£1.8 trillion) debt is the world’s third largest after the US and Japan. Any serious stress in its debt markets threatens to reignite the eurozone crisis. This may already have begun after the US Federal Reserve signaled last week that it will begin to drain dollar liquidity from the global system.

Hey Mario: what part of "FUCK OFF" don't you undestand.

EUROSMOKE AND LIES - “The answer to the crisis has not been less Europe but more Europe... The EU and the [euro] are no exceptions. The choice is between adapting them to the new conditions or do nothing and risk their dissolution.” The EU is a body primarily driven by pure politics without any ameliorating rational input from experts in economics markets science etc. Both the creation of the Eurozone and the FTT were political projects making extensive use of confirmation bias and totally ignoring expert advice. The Eurozone is a failure and the FTT will kill off the City as well as destroy markets inside the EU which both sovereign states and EU companies rely on. Politicians and bureaucrats taking the decision have never even heard of the repo market but they are about to find out how important it was once they destroy it. Rational thought would mean taking account of the views of experts on the FTT but the FTT is a political dream where there is no room for reality. If there was there would be no FTT. Any organization run by purely political decisions is going to lose out against a more rational response elsewhere in the world. I doubt the EU will ever base its decisions on rational thought processes rather than politics as there is no mechanism in place to force elite politicians to take note of experts. In their conceit they only see their own narcissistic beliefs as relevant to decision taking. Confirmation bias means that politicians start by already knowing the answers and see the job as putting their irrational policies in place. When policies do not work in the real world confirmation bias is called upon again to warp data to explain failure without ever seeing any need to change policy. Failure followed by more failure is guaranteed by the political approach. Pressure from the UK public to leave will increase noticeably once the FTT is in place and the City goes down the tubes. This will be extensively reported by the media. How often have we heard this before? You will never convince the average Brit that having more decisions taken by the unelected elite in Brussels is going to deliver anything for us. The nearer you get to a EUSSR the less the Brits will like it and the more we will want to leave. We have a totally different mentality to the majority of the EU who think that taking all decisions centrally will lead to economic success. That idea is seen as rubbish here and unworldly. To work in the real world the people taking the decisions would have to real experts in many fields and driven by rationality instead of politics. That can never happen in the EU as it is a political construct. Instead decisions are from over-conceited politicians and bureaucrats whose knowledge and understanding of the real world is minimal. Whatever Draghi says about banking reform will be politically based and not based on research by experts. The starting point always has to be 'more EU' whereas it is unlikely in the real world that all answers would come out to be simply as case of more EU solving the problem. That is illogical. Draghi : "If we are successful in establishing (a federal Europe) as I am sure we will be..." "Europe is much more stable today (thanks to me)..." There you have it. Breathtaking arrogance combined with delusion. The only option we have is to gtf away from pr!cks like this.

Hmmm...I wonder what would the master EU idiot - Ollie R. say about this ...

Telling people that they can lose their deposits, even possibly below guaranteed amount (100,000 euros), which later was retracted, had not been a mistake. Firstly people realized and got used to the idea that such thing was no longer unthinkable. Secondly, by hitting deposits above 100,000 euros with up to 40% (or even maybe up to 60%) tax, it was made clear that such hit can be very hard indeed. Not some 6.75% or 9.9% as originally mooted: so now it is matter for the 'financial markets' to extend their target, below 100,000 euros. It is indeed a very primitive piece of social engineering and coaching people for the forthcoming loss. It is preparing psychologically all countries in Europe for the next step of the largest heist in history: direct and hard targeting of people's deposits. There is also a rather ironic twist in the events in Cyprus. It has been widely reported that many billions of euros held in banks in Cyprus came from all sorts of dodgy businesses (Russia?). There is even a whispering subliminal propaganda designed to make it easier to accept this new phase of the largest heist in history. The message is that there is nothing wrong in stealing money from the thieves.

Technically what happened there was that the billions of euros in cash deposited in Cyprus was used to redeem for a lot of toxic waste of the financial institutions (it is called 'making investments' in a financial language, with depositors cash). So, as expected, those who had cash ended up with nothing and those who held (and are still generating) zillions of toxic waste, got another tranche of their heist. The largest heist in history continues. Now...if it is true, as it is widely rumored, that many billions of euros of mafia money have been kept in Cyprus and now something like 40% or even 60% are going to be lost, one could wonder whether European politicians, central bankers, who drive this process, e.g. finance ministers, or some other decision makers, even lower down the chain, are going to sleep comfortably. Or are they going to think more about their own and their families safety? Is mafia going to accept such multibillion euros loss? Or would they plan to teach a lesson in order to get their money back, to get a compensation for the current 'inconvenience' and mess and to make sure such a thing is unthinkable in the future. Mafia starts wars when there is big money at stake. And in Cyprus some powerful groups lost billions of euros. Therefore we can also look forward to listen to some interesting news. Don't be surprised.

Savers in Cyprus could face losing one-quarter of their bank deposits under new proposals being discussed by the government as ministers flew to Brussels to salvage a European bailout.

The new bank levy would only apply to people with more than €100,000 (£85,260) in their accounts, according to the finance minister, Michael Sarris, who also said that significant progress had been made in talks with European officials.

President Nicos Anastasiades travelled to Brussels to work out an alternative plan to raise funds that would allow the country to qualify for an international bailout. Cyprus must raise €5.8bn (£4.9bn) before Monday to qualify for the €10bn EU bailout it needs to prevent the collapse of its banks and a potential departure from the eurozone.

The idea of raising money through a one-off levy on bank deposits was criticised in Cyprus, Russia and elsewhere and was unanimously rejected by the Cypriot parliament earlier this week, but is being reconsidered after negotiations with Russia to find alternative finance did not achieve a result.

On Friday, the Cypriot parliament passed nine bills, including three that would see ailing banks restructured, starting with Laiki, Cyprus's second-largest bank, a "national solidarity fund" and capital controls that would prevent large withdrawals from the country. A decision on the controversial bank savings levy and how it would be applied is due on Saturday.

Other Cypriot politcians discussed a smaller bank levy of 1% which would be aplied to all accounts. The debate is divided between those that want the levy to be borne only by the wealthy which includes a high percentage of Russians who hold €30bn in Cypriot banks.

Eurozone ministers are scheduled to meet on Sunday to decided how to help Cyprus avoid economic chaos. The European Central Bank has threatened to cut off funding from Monday and the banks face a run of investors withdrawing money when they re-open.

The Cypriot parliament will meet after the meeting of the eurozone ministers on Sunday evening.

MADRID—Spain's central bank said a recession in the euro zone's fourth-largest economy deepened slightly in the final quarter of last year, but it said austerity cuts are bringing the country's runaway budget deficit under control. In the first estimate of fourth-quarter economic performance, the Bank of Spain said the economy contracted 1.7% compared with the same period a year earlier and likely contracted 0.6% from the previous quarter. In the third quarter, the economy had shrunk 0.3% from the previous quarter, and 1.6% on an annual basis. The Bank of Spain said gross domestic product fell just 1.3% in the whole of 2012, which was less than the 1.5% contraction anticipated by the government and a sign that strict budget cuts across the board are having a less detrimental effect than some feared. It cautioned that continuing cuts could still weigh on an economy already hurt by efforts to trim debt. "This budget consolidation effort has had a net contracting effect on activity throughout the year, especially in the last few months," the central bank said. This year, meeting even stricter austerity targets "will require an additional, very ambitious fiscal effort by the central and regional governments." Those comments are in line with heightened concerns by local and foreign observers that accelerated austerity measures promoted by the European Union are self-defeating, as a collapse in economic activity makes it harder to boost tax revenue, putting pressure on budget deficits. Earlier this month, the International Monetary Fund said it revising its metrics for how quickly governments should cut their budgets and the IMF's top economist Olivier Blanchard made the case that Europe's fiscal tightening has been too severe. "We do need to reduce the deficit, but the EU should be more flexible about the deadlines," said Josep Comajuncosa, an economics professor at Spain's ESADE business school. "Requiring a fast and drastic reduction of the public deficit could backfire. The deficit target should be pushed back one or two years." The central bank said tax revenue increases in recent months will make it easier for the government to get closer to its target of lowering the 2012 budget deficit to 6.3% of GDP from 9% in 2011. The target for this year is 4.5% of GDP. The latest data available, the central bank said, indicates tax revenue picked up in recent months due to higher value-added and corporate tax receipts, while expenses fell after the government suspended an extra monthly payment for civil servants and decided not to adjust pensions for inflation—two measures which eroded popular support for Prime Minister Mariano Rajoy. Spain's statistics institute is due to release an official preliminary estimate of fourth-quarter GDP Jan. 30. Full data on Spain's 2012 budget deficit, including for regional governments, will likely be released late February.(sursa : WSJ)

Eurozone leaders met for the umpteenth time in October in their latest attempt to shore up the faltering economies of Europe and restore confidence in the euro.

Since the onset of the financial crisis in 2008, there has been an almost constant string of meetings among top policymakers in a concerted effort to resolve the debt crisis that has decimated the Greek economy and dragged the eurozone to the brink of its second recession in three years.

These include meetings of the Eurogroup, Economic and Financial Affairs Council (known as Ecofin) and European Council, as well as full-blown European Union summits.

And yet still the crisis rumbles on, with Spain looking increasingly likely to follow Greece, the Republic of Ireland and Portugal in seeking a bailout as it struggles to bring its debts under control.

So what have all these meetings, talks, lengthy negotiations and summits been in aid of? What have they actually achieved?

Bankers have long pilloried policymakers for their inability to get to grips with the crisis and implement effective reforms to solve it. But do they have a point?

Decide for yourselves with our handy summary of the major eurozone meetings held since Athens first called on its neighbours for help.

ECB president Mario Draghi has expressed strong support for a "currency commissioner", saying it would strengthen the euro.Spanish prime minister Mariano Rajoy has criticised the suggestion that eurozone countries should surrender sovereignty and agree to the creation of a European Commissioner with new powers over national budgets of euro countries.  Speaking at a press conference with Mario Monti, Italy's leader, in Madrid, Rajoy argued that this was only acceptable as part of a full package of closer integration.

Rajoy said:

This is an idea, that considered on its own, I personally don't like. As part of a variety of measures for fiscal union, it could be considered.

The Bank of Israel has surprised the markets by cutting interest rates by a quarter-point, to 2%.

The Bank of Israel made the move after concluding that Israel's economy could struggle in early 2013 – and cited the eurozone crisis as a key factor...In a statement, it said:

Against the background of the debt crisis in Europe, the level of economic risk from around the world remains high, and with it the concerns over negative effects on the local economy.

It's the latest in a string of rate cuts by central banks around the globe, as concern has grown about the world economy.

None of the economists surveyed by Bloomberg had expected a cut, and the move has sent the shekel falling against the dollar.

Israeli shekel drops as central bank unexpectedly lops 25 BP off interest rate, taking it to 2%.

European leaders early Friday agreed to have a new supervisor for euro-zone banks up and running next year, a step that will pave the way for the bloc's bailout fund to pump capital directly into banks throughout the single-currency area......
Friday's announcement is a disappointment for some officials at the European Commission, the EU's executive arm, who had hoped to have the supervisor operational at the start of 2013.
The leaders also discussed plans for a common budget for the 17 euro-zone nations that could be used to absorb economic shocks impacting one part of the euro zone but not others. But José Manuel Barroso, the commission president, said: "This is something for the medium and longer term.

The man who died in Greece :
The death came as protesters lobbed flares, petrol bombs and chunks of marble at lines of riot police, who responded with tear gas and stun grenades, in confrontations which have become all too familiar in the Greek capital over the last three years.

The clashes erupted in and around Syntagma Square, in front of parliament, during protests against a new wave of austerity cuts that the government plans to introduce in November.

"A 65-year-old man was taken to hospital where efforts to revive him failed," a health ministry official told the AFP news agency.

One report said the man had been found dead in Syntagma Square while another said he was found on a bench several hundred yards from the violence.

"Indignados" in Spain

"Que se vayan todos," or "Away with all of them," became one of the slogans chanted by the tens of thousands of "Indignados" in Spain at protests last year. In addition to their eponymous outrage, many had one thing in common: Most were young and viewed themselves as victims of the crisis.

They might have been more specific and instead chanted: "All the old people must go!" This phrase would apply because, in many ways, the euro crisis is also a conflict between generations -- the flush baby boomers in their fifties and sixties are today living prosperously at the expense of young people.

Intergenerational equity -- measured among other things by levels of direct and hidden debts and pension entitlements -- is particularly low in Southern Europe. In a 2011 study of intergenerational equity in 31 countries by the Bertelsmann Foundation, Greece came in last place. Italy, Portugal and Spain didn't do much better, landing in 28th, 24th and 22nd place respectively. Currently, the unequal distribution of income and opportunities is particularly distinct:

The employment market collapse has hit young Europeans much harder than older generations. In Greece and Spain more than half of those under age 25 are unemployed -- twice the rate of older workers. Things are even worse in parts of southern Italy, where youth unemployment has risen above 50 percent. One reason for this situation is unequal employment circumstances. Older Spaniards and Italians, for example, profit from worker protection laws preventing them from getting fired that are quite strong by international comparison. But almost half of young Italians and 60 percent of young Spaniards are on temporary employment contracts and can easily lose their jobs.  The burdens and risks of the euro bailouts are also mainly borne by young people. Ultimately, growing national debts and bailout funds worth billions will be financed through bonds that won't be due for many years to come.

I've been wondering about Norway; for many the model to emulate. Many of the numbers here come from Norsk Industris Konjunkturrapport 2012. It's an employers' association, so expect a center-right bias. I'd be delighted if a Norwegian were to comment.

Norway's Sovereign Wealth Fund means the country has no insolvency problems. Unemployment is a low 3%. One out of three jobs is in the public sector. The Norwegian oil industry is expected to show a revenue growth of 15% next year, and is hiring. But Norway's traditional export sectors - industry and mining - will grow only 0 to 2%, and are firing people. And these traditional sectors employ about five times as many people as the oil sector.

There is a clear dichotomy in Norway's industry: on the one hand a booming oil sector which keeps the currency strong and wages high; and on the other hand an export-oriented industry which are suffering from the combined effect of the high kronor and high wages.  Surprisingly enough, given the strong sense of crisis in Europe, Norwegian companies actually increased their exports to the EU in 2011 by 12%. Exports increased to all EU countries except the PIGS countries in the south. Norway is not whining demand is weak. Exports to the UK increased +6.2%. Exports to the US dropped -4.3%. These are data for the whole of 2011. 80% of Norwegian exports go to the EU, 2% to China. Being outside the EU, Norway is free to make its own free-trade agreements with China, but China is not interested. Negotiations broke off when Norway gave Liu Xiaobo the Nobel Prize back in 2010. Norway had its banking crisis, following a period of financial deregulation. Small banks began to fail in 1988. The crisis peaked in 1991, and ended in 1994, six years after it began. Just imagine the Guardian running a "Norwegian Banking Crisis Live Blog" six years on end.
What's my take on Norway?

There are two Norways. The oil industry is booming; the export-oriented industry is suffering. The kronor-euro exchange rate is causing discomfort for Norway's export industry.  When a overvaluation of the Swiss franc threatened Swiss exports the Swiss National Bank intervened, and the Swiss franc has been at exactly 1.20 euro since. Of course, this means a large part of Swiss monetary policy is no longer determined in Bern, Switzerland but rather in Frankfurt, Germany. Nevertheless, pegging the franc to the euro is seen by many Swiss as a pragmatic solution.  Norway's future may be Switzerland's past. We may see the Norwegian kronor pegged to the euro sooner than we think. Yes, such a move would be political suicide in the UK. So what?

Poor manufacturing data from Italy, Spain, France and Germany erodes early gains on European markets, while eurozone unemployment hits a record high of 10.9pc.....Unemployment in the eurozone reached a record high again in March as spending cuts continued to hit the working population. For all 17 nations in the eurozone, the jobless rate rose again to 10.9%, the highest since the euro was formed in 1999, Eurostat said. For the eurozone, 17.4 million are now looking for work and more than 3 million of those are under 25. Italy's unemployment rate reached a 12-year high, up to 9.8%. And in a surprise move, the jobless rate in Germany rose to 6.8% in March, official figures showed, having been expected to stay at the previous month's 6.7% after six months of declines. The number of Germans out of work is now at 2.87 million.For the whole of the European Union, including countries such as the UK and Denmark, the jobless rate is 10.2%.

Austerity or growth ... Last week, Spain said that the number of job seekers rose for the eighth month in a row in March to hit 5.6 million, a record rate of 24.4%. Spain has the highest unemployment rate in the European Union and it is expected to rise further this year. Spain and Italy are both in recession and have seen borrowing costs rise, raising the prospect that they may need help or even bailouts. A debate is raging in Europe about whether politicians have prioritized austerity at the expense of economic growth, making recovery even harder for themselves.

Eurozone - Remedy won't be available soon - Faced with the prospect of the Eurozone crisis spreading to Spain, Italy and Cyprus, "Eurozone governments are accelerating efforts to bolster their €440bn rescue fund", reports the Financial Times. On July 21, "they agreed to equip the EFSF with the ability to repurchase the bonds of stricken governments on open markets, provide them with short-term lines of credit and cash to help recapitalise ailing banks." With Spanish and Italian risk premiums on the rise, "the ability to repurchase Spanish or Italian bonds at distressed prices would be one way to help stabilise the markets". "Yet European diplomats and officials acknowledged that it would be weeks – and possibly months – before the EFSF’s new powers could be put to use", notes the FT, reporting that officials of the Eurozone are accelerating their work to produce a draft document. The final text would then have to "be signed by the 17 Eurozone governments, and then undergo a ratification process that includes parliamentary approval in most of those countries."

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.

BERLIN - The succession of European Central Bank President Jean-Claude Trichet will not be a topic at this week's Group of 20 meeting and will be dealt with after March, German Finance Minister Wolfgang Schaeuble said on Friday. "We will then see (if there will be a German candidate). The important thing is that we will have a good candidate," Schaeuble added in an interview with German radio channel Deutschlandfunk.BCE,EURO,Dollar,RON,Crisis Agerpres, Mediafax
FRANKFURT - Emergency borrowing from the European Central Bank remained exceptionally elevated for a second straight day on Friday, intensifying speculation that one or more euro zone bank might be facing new funding problems. ECB figures showed banks borrowed more than 16 billion euros in high-cost emergency overnight funding, the highest amount since June 2009 and well above the 1.2 billion euros which banks were taking before the figure first jumped on Thursday. The ECB gives no breakdown of the borrowing figures and declined to comment on Friday when asked for an explanation for the jump. Traders remained unsure whether the spike was due to a serious funding issue or whether a bank had simply made an error earlier in the week by not borrowing enough at the ECB's regular weekly funding handout. If a bank, or number of banks, did not get enough funding, and were unable to make up the difference in open markets, they would be forced to use the ECB's emergency facility until the next ECB tender came around. The next ECB offering is on Tuesday, banks get the money on Wednesday, meaning any change would evident in figures published early on Thursday. "As no bank or banking group from any euro zone country is aggressively seeking money in the interbank market at the moment, it is likely that something went wrong at the main refinancing operation," said one euro zone money market trader. "The bank or banking group needs to tap the ECB for the money whether they like it or not, or they are doing that so as not to appear active on the money market and to thereby be stigmatized," he added

European bank shares were down 1 percent by 1100 GMT while the euro fell against the dollar and other major currencies for much of the morning. Money markets showed little reaction, however. Key euro bank-to-bank lending prices remained on a downward trajectory, a direction traditionally at odds with rising tensions. The theory that the spike was due to human error appeared to be supported by data from the ECB's latest weekly funding operation. Banks borrowed the lowest amount since June at the tender, 19 billion euros less than the previous week and well below expected demand of around 160 billion euros.

However, a monetary source in Italy, speaking on condition of anonymity, told Reuters that the increase in borrowing was not a technical problem and was a sign that money markets were still not functioning correctly and geographically split in the wake of the global financial crisis. The source said the Italian banking system continued to have good access to money markets, while high-level Spanish financial source said the jump was not down to Spanish banks. The borrowing jump added extra complexity to the question of whether the ECB will scale back, or extend, its money market support measures at its next meeting on March 3.

ECB President Jean-Claude Trichet said in a recent interview that the health of money markets had improved, although Belgium's Guy Quaden said this week liquidity support remained necessary. "If the increased use of the marginal borrowing facility is due to new problems in the banking system this would call for an extension of the ECB's liquidity support," said UniCredit analyst Luca Cazzulani. "The ECB knows exactly who is borrowing the money and why they are doing it. If it is due to a mistake then it should not influence their thinking at all." The extra 0.75 percent which banks have to pay for overnight funding from the ECB normally means it is used only as a last resort. The last time before this week that overnight borrowing exceeded 10 billion euros was on June 24, 2009, when it was 28.7 billion euros, the highest ever. This year, emergency overnight borrowing has been above 1 billion euros only twice. Traders said while mistyping the required amount or missing the ECB's tender altogether would be an unlikely mistake, it could happen. "It would be a huge oversight and pretty unlikely but it is possible if a lot of things conspired against you," said one London-based money market trader. "If it is a mistake then someone's boss is not going to be very happy." A number of banks, mainly from the euro zone's most debt-strained countries but also troubled banks in core countries, remain barred from open money markets and almost completely dependent on the ECB for funding.

As of December 31st 2010 Romanian banks assets amounted to 342 billion lei (80 billion euros), with BCR and BRD vying for the top position, just as 10 years ago, and being followed by a whole range of banks whose assets were cut in half. Last year, BCR managed to gain market share, after four years of decline, while BRD lost ground because it adopted an extremely cautious policy, no longer willing to take risks in an economy affected by recession. This policy imposed by the risk-averse new management, has borne fruit as far as non-performing loans are concerned, but has also entailed losing clients with big businesses. BCR, on the other hand, has been very aggressive on the corporate segment in over the last year, taking customers from other banks by being more risk-friendly.
In terms of profit, however, BRD fares significantly better than BCR, reporting 501 million lei in income, which means its assets fetch more profit despite being smaller.
Raiffeisen climbed to the third position, replacing Volksbank, which lost significant ground, falling to the eighth position. Breathing down Raiffeisen's neck is CEC, the state-held bank that has been steadily gaining market share over the course of last year. Next in the top ten ranking are Banca Transilvania, Alpha Bank and UniCredit, with Bancpost and ING on the bottom two positions. The top-ten banks in the system account for 78% of its assets, proving how concentrated the Romanian market is. The entire banking system posted a 304 million-lei loss last year, compared with a record-high profit of 4.4 billion lei in the 2008 peak year.

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.

Romanian tax authority ANAF will refund in January value added tax to companies worth 1.36 billion lei (EUR1=RON4.2621), the highest sum returned so far in a single month, the authority said Wednesday.

Romania To Pay VAT Refunds Worth RON1.36B In January

Of the total refunds, ANAF has already paid Monday RON557 million, and will pay the rest of the sum by the end of the month. Some RON1.21 billion of the total refunds represents compensations.

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