Investment Week (January 8)
Is the Euro crisis over? The answer depends on who’s speaking. In Lisbon, José Manuel Barroso, the president of the European Commission, declared the crisis was over. But “Barroso’s comments were in stark contrast to those given by German chancellor Angela Merkel, who said in her New Year’s address that the euro crisis, though improving, was ‘far from over.’”
Euromoney (May 31)
“There’s one problem with a European deposit guarantee scheme: it won’t work.” Fear of bank runs is growing. To counter these fears, Jose Manuel Durao Barroso, president of the European Commission, has put forth “a banking union with integrated financial supervision and single deposit guarantee scheme” (DGS). However, a DGS would do little to calm fears of redenomination, even if it could be prepared in time. Greece has a DGS, yet 25% of bank deposits were withdrawn in the past 2 years, largely because savers worry their euro deposits will be redenominated into drachma. Furthermore, most DGS “protect against the failure of one or two banks, not the failure of a national banking system.”
“There’s one problem with a European deposit guarantee scheme: it won’t work.” Fear of bank runs is growing. To counter these fears, Jose Manuel Durao Barroso, president of the European Commission, has put forth “a banking union with integrated financial supervision and single deposit guarantee scheme” (DGS). However, a DGS would do little to calm fears of redenomination, even if it could be prepared in time. Greece has a DGS, yet 25% of bank deposits were withdrawn in the past 2 years, largely because savers worry their euro deposits will be redenominated into drachma. Furthermore, most DGS “protect against the failure of one or two banks, not the failure of a national banking system.”
The Guardian (May 14)
“Europe’s ruling elite is now openly talking about whether Greece might leave the euro, breaking a two and a half year taboo. German chancellor Angela Merkel and EU president José Manuel Barroso were among those saying that if Athens could not abide by the rules, Greece would have to leave.” But of what would ensue, no one is sure. It could lead to “collapsing banks, soaring inflation, but possible salvation.”
“Europe’s ruling elite is now openly talking about whether Greece might leave the euro, breaking a two and a half year taboo. German chancellor Angela Merkel and EU president José Manuel Barroso were among those saying that if Athens could not abide by the rules, Greece would have to leave.” But of what would ensue, no one is sure. It could lead to “collapsing banks, soaring inflation, but possible salvation.”
