Financial Times
September 26, 2011
Hints of a fresh eurozone deal that would include a significant boost to the size of the single currency’s rescue fund were greeted as a positive step, if true, by increasingly sceptical investors and analysts.
Discussions at the International Monetary Fund annual meetings in Washington threw up a raft of speculation that the €440bn European financial stability facility could use leverage to increase its funding possibilities to anywhere from €1,000bn-€3,000bn.
A growing consensus in the markets had hit on a figure of about €2,000bn needed for the rescue fund because of the size of the Italian bond market, the world’s third-largest with €1,600bn in debt outstanding.
“If the reports are correct and the measures get full approval, it would certainly be one of the most positive steps so far,” said Jim Reid, strategist at Deutsche Bank. But he added, after data showed Europe on the brink of a recession and Greece contracting ever harder: “I still don’t think it addresses the growth concern.”
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