Financial Times
October 20, 2011
This weekend’s summit of European leaders has dominated financial market action for the past few weeks as investors watch for clues about potential measures to tackle the region’s debt crisis. But what will be the likely outcome of the meeting – and how will markets react?
Carsten Brzeski, economist at ING, says a further Greek debt restructuring looks like the most tangible result from Sunday’s summit. “A renegotiation of the July agreement could see an increase of the “voluntary” private sector involvement from 21 per cent to around 40 per cent,” he says.
“Bank recapitalisation should help to cushion the negative impact from a possible restructuring. However, a detailed plan on Sunday looks doubtful; the most likely outcome is more general agreement on higher Tier 1 capital ratios.
“Leverage for the European financial stability facility should have the biggest impact on financial markets as the lack of an unconditional lender of last resort in the eurozone is the major shortcoming of the current euro set-up – but taking steps to address this will be easier said than done.
“The crisis is simply too complex and there are too many devils in the details to come up with a final, all-encompassing package. However, even without the super-duper master plan, Sunday’s summit could bring new steps in the right direction.”
More
No comments:
Post a Comment