Financial Times
July 21, 2011
So that is what markets going into reverse sound like. A draft eurozone communiqué circulating ahead of the conclusion of the “summit to save the euro” prompted yields on Italian and Spanish debt to snap back, while German Bund yields widened. The text may have been all about Greece, Ireland and Portugal but the message was for Italy and Spain. The euro survives, until the next summit.
The summiteers appear to realise that a solution to the sovereign debt crisis has been staring them in the face all along: the European financial stability facility. This body’s scope and financial firepower are to be greatly expanded. As a start, the cost of its lending to Greece, Ireland and Portugal will be cut to 3.5 per cent, and maturities doubled to 15 years. That concrete act should have immediate benefits for those three countries – and lasting effects on the eurozone’s fiscal cohesion.
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