Reuters
November 11, 2011
Political turmoil in Italy and Greece is complicating efforts to increase the firepower of the euro zone's bailout vehicle to 1 trillion euros, an official at the European Financial Stability Facility said on Friday.
Euro zone countries had hoped to increase the EFSF's lending capacity by December, combining bond insurance with investment vehicles. But after the government in Athens fell and bond markets pushed Rome to the brink of a bailout that the euro zone cannot afford to give, the Luxembourg-based EFSF thinks it may be more realistic to aim for less leverage.
"The political turmoil that we saw in the last 10 days probably reduces the potential for leverage, so that may be only by three to four times, instead of four to five," the EFSF source said.
Investors have shunned bonds issued by highly indebted euro zone countries and luring them back by offering insurance on losses, the centerpiece of a plan agreed in Brussels late last month, would probably use up more of the fund's resources.
More
No comments:
Post a Comment