Wall Street Journal
July 20, 2011
The euro zone needs a "more focused and effective policy response" to stop the systemic threat to financial stability in the single-currency area, Fitch Ratings warned Wednesday.
The focus of European policy makers on how to treat private-sector lenders, rather than developing "a coherent and unified response to the broader sovereign and bank crisis" has sapped market confidence and prompted contagion to Italy, the credit-rating firm said.
A more focused and effective approach would likely involve boosting the European Financial Stability Facility, or EFSF, and making it more flexible, as well as clarity on the role of private-sector creditors in sovereign bailouts, it added.
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