July - December 2011

France and Germany Stand by Eurozone Plan
6 December 2011 – BBC News
France and Germany have reaffirmed their commitment to reform the Eurozone, after agreeing on a treaty change on Monday. In the meantime, Standard and Poor’s put most of the zone on “credit watch” over debt crisis fears. S&P’s announcement came hours after French President Sarkozy and German Chancellor Angela Merkel announced proposals to restore confidence in the Eurozone. At their joint press conference on Monday, Mr. Sarkozy said things in Europe “cannot continue as they are” and that the wish of both countries was for a “forced march towards re-establishing confidence in the Eurozone.” (Read More)

IMF Chief Cautious on France-German Debt Pact Call
6 December 2011 – The Financial Times
The International Monetary Fund chief Christine Lagarde on Monday welcomed France and Germany’s push for tough fiscal standards in the Eurozone, but said more steps were needed to tackle the region’s crisis. Speaking to the European Institute in Washington, she warned that, “it is not in itself sufficient and a lot more will be needed for the overall situation to be properly addressed and for confidence to return.” Lagarde also commented, “that the global outlook remains bleak, not only for Europe but for many corners of the world.” (Read More)

Germany’s Schauble Welcomes Eurozone Downgrade Threat
6 December 2011 – BBC News
German Finance Minister Wolfgang Schauble has said Standard & Poor’s threat to downgrade Eurozone countries is the “best incentive” ahead of Friday’s summit. S&P announced that six countries with top AAA ratings have a 50% change of seeing their credit ratings downgraded. The announcement had several effects on markets across Europe. Spain and Italy saw their borrowing costs rise slightly. The ratings agency said the announcement reflected “their belief that systemic stresses in the Eurozone have risen in recent weeks to the extent that they now put downward pressure on the credit standing of the Eurozone as a whole”. (Read More)

Lagarde Says IMF May Get G-20 Help to Counter Europe Crisis
2 December 2011 – Business Week – Sandrine Rastello
International Monetary Fund chief Christine Lagarde said G20 nations are prepared to boost the fund’s resources as the European debt crisis threatens the global recovery. Largarde said during a joint press conference with Brazilian Finance Minister Guido Mantega that,“the G20 will commit the resources that are necessary for the IMF to play its systemic role”. The funds that the IMF currently has available for lending may not suffice if the global outlook worsens. Mexico indicated that it is ready to contribute to a greater range of actions by the Fund. The BRICs may also gain a bigger role in the IMF if they provide assistance to the euro region. (Read More)

Eurozone Crisis: Cameron and Sarkozy in Paris Talks
2 December 2011 – BBC News – Ian Watson
British Prime Minister David Cameron is due to discuss the Eurozone debt crisis with French President Nicolas Sarkozy during talks in Paris. Mr. Sarkozy mentioned in a major speech on the economy on Thursday that Europe had to be “refounded.” Sarkozy also said he wanted a new treaty to impose financial discipline on Eurozone members. On the other hand, Britain has expressed its concern about the possible impact of a reorganization, which could marginalize its influence in the EU. The two leaders will discuss plans to reorganize the governance of the Eurozone, which will see closer cooperation within the 17-eurozone bloc, potentially lessening Britain’s influence. (Read More)

Merkel Urges Euro Fiscal Union to Tackle Debt Crisis
2 December 2011 – BBC News – Stephen Evans
German Chancellor Angela Merkel has said Europe is working towards setting up a “fiscal union” in an effort to resolve the Eurozone’s debt crisis. Mrs. Merkel told the Bundestag that a new treaty was needed to set up such a union and impose budget discipline. In her speech to the Bundestag, Mrs. Merkel promised “concrete steps towards a fiscal union” – in effect, close integration of the tax and expenditure policies of individual Eurozone countries, with Brussels imposing penalties on members that do not follow the rules. In her speech on Friday, also reiterated her opposition to the notion of the ECB issuing “Eurobonds” backed by all Eurozone members. (Read More)

ECB’s Draghi Warns of Increased “Downside Risks”
1 December 2011 – BBC News
Mario Draghi president of the European Central Bank has told the European Parliament that “downside risks” to the Eurozone economic outlook have increased. Mr Draghi also reinstated the ECB’s central role of fighting inflation by saying that the ECB’s temporary measures such as buying up government debt would be limited. Mr. Draghi emphasized that the Eurozone design must be adapted with the requirements of monetary union. He also said that the ECB was aware of the continuing difficulties for banks, particularly in raising capital. As a solution to the banks’ problem, the central banks of some of the world’s biggest economies announced on Wednesday a plan to make it easier and cheaper for banks to obtain US dollars. (Read More)

Debt Crisis: EFSF Not Enough, Eurozone Turns to IMF
1 December 2011 – Taiwan News – Cherice Chen
European finance ministers said they would seek a greater role for the International Monetary Fund alongside the European Financial Stability Facility (EFSF) in the latest attempt at controlling the Eurozone’s sovereign debt crisis. Ministers have decided to turn to the IMF after conceding that higher interest rates and lower appetite for European bonds made it impossible for the EFSF to be leveraged up to its 1 trillion euro target. The Eurozone’s finance ministers have agreed to rapidly explore an increase of the resources of the IMF through bilateral loans, so that the IMF could adequately match the new capacity of the EFSF and cooperate more closely with it. (Read More)

No Progress in Efforts on IMF Resources
30 November 2011 – Reuters
A senior G20 official in Asia told Reuters on Wednesday that policymakers have made no progress in efforts to find details on boosting the IMF’s resources. The G20 official, speaking in anonymity, said that the idea of holding a finance ministers’ meeting in December also has made no progress. The Eurozone ministers announced on Tuesday that they may turn to the IMF for more help to resolve the sovereign debt crisis. (Read More)

Hungary Seeks Aid from EU, IMF
22 November 2011 – Wall Street Journal – Gergo Racz and Emese Bartha
The European Commission said Monday that it has received a formal request from Hungary to receive financial assistance from the European Union and the International Monetary Fund.  The Commission will examine the authorities’ request in consultation with EU member states and the IMF. Hungary’s economy ministry said last week it will start talks with the IMF and the EU on securing some form of support the reassure investors. Hungarian official have reiterated that this is just a precautionary measure to reassure risk-free growth for the country. (Read More)

Can’t Rule Out Help for Italy
21 November 2011 – Wall Street Journal – Riva Froymovich
An International Monetary Fund official refused to rule out Monday that the IMF may still need to provide assistance to Italy. Luc Everaert, the IMF’s division chief for euro-zone policies, has said it’s “impossible to predict” at this stage if the IMF will have to commit funds. Former Italian Prime Minister Silvio Berlusconi said earlier this month that Italy had turned down an IMF loan offer made during the G20 meeting in Cannes. Everaert said it will take time for Italy to build credibility, and if reforms do not materialize, markets will take fright. The IMF continues to press the EU leaders to act urgently to solve the crisis. (Read More)

Spain’s Cost of Borrowing Increases Sharply
22 November 2011 – BBC News
Spain’s cost of borrowing rose sharply in the country’s first fund-raising auction since the change of government at Sunday’s general election. Spain raised 2.98 billion euros in an auction of three and six month bills, but at higher yields. On the thee-month bills, the annualized interest rate Spain had to pay more than doubled to 5.11% from 2.29% at the last auction in October. The demand in the financial markets for the debt was strong, outstripping supply by more than three-to-one, and allowing Spain to meets its target of raising up to 3bn euros. However, the rise in yields suggests that investors do not feel more optimistic about the new government’s ability to fix the economy. (Read More)

Eurozone Crisis to Dominate Cameron Talks with Merkel
18 November 2011 – BBC News
UK PM David Cameron will hold talks with German Chancellor Angela Merkel to try to resolve tensions over the Eurozone crisis. Both countries have been pressing for action to stabilize the euro. Germany is pushing for more integration, but the UK says it wants safeguards for EU states that do not use the single currency. The UK’s Primer Minister, David Cameron, met with European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso in Brussels on Friday before flying to Berlin. There is some tension between the two countries because of their different views about the future of the Eurozone and the role of the European Central Bank in the crisis. (Read More)

ECB’s Draghi Urges Swift Action on Bailout Fund
18 November 2011 – BBC News
Speaking in Frankfurt, Mr. Draghi has recently expressed his impatience with the lack of progress by European governments. Mr. Draghi’s comments came as markets have remained shaky about the crisis. Mr. Draghi suggested that the ECB’s main job remained to ensure long-term low inflation, and he called for governments to tackle the debt crisis through “solid public finances and structural reforms.” Markets are awaiting the details of how the size of the Eurozone bailout fund will be boosted. Mr. Draghi comments seem to echo Angela Merkel’s position that the ECB cannot solve the euro crisis. (Read More)

Joining the WTO Brings OECD Closer
18 November 2011 – The Moscow Times – Irina Filatova
According to Russia’s Economic Development Ministry, Russia could complete talks on joining the Organization for Economic Cooperation and Development by the end of next year. “Completing the WTO negotiations will undoubtedly push the process of joining the OECD forward,” said a deputy head of the Ministry. For Russia to become a member of the OECD, a consensus decision by all its 34 member states is needed, but the timeline for the decision depends on how quickly Russia can meet all of the membership requirements. Russia completed talks to join the WTO earlier this month after resolving its dispute with Georgia, which had blocked its accession. (Read More)

OECD Area Economy Expands at Faster Pace in Q3
17 November 2011 – RTT News
Economic growth in the Organization for Economic Cooperation and Development (OECD) accelerated modestly in the third quarter, driven mainly by strong growth in Japan, preliminary data showed Thursday. The GDP increased 0.6 percent in the third quarter, faster than the second quarter’s 0.3 percent growth. Growth in the Eurozone and the EU remained sluggish at .0.2 percent in the third quarter, while it increased in the UK to 0.5 percent from the previous quarter’s 0.1 percent.  The US economy grew 0.6 percent in the third quarter. (Read More)

International Monetary Fund Europe Director Resigns
17 November 2011 – BBC News
Antonio Borges, the head for Europe at the IMF, has resigned due to personal reasons. He had been director of the IMF’s European Department for one year. Earlier this year, Mr. Borges was forced to retract comments in which he suggested the Fund might help Italy and Spain by buying up their debts. BBC reporter Steve Kingstone said that the resignation did not come as a surprise because “his response to the Eurozone crisis was controversial – and, to some, destabilizing.” IMF chief Christine Lagarde will seek to appoint Reza Moghadam, director of the IMF’s strategy policy and review department, as Borges’ successor. (Read More)

Spain’s Borrowing Costs Hit 14-year High
17 November 2011 – BBC News
The average yield on 10-year government bonds soared from 5.433% in October to 6.975% at the latest bond auction in Spain. The figure is close to 7% - the level at which other Eurozone countries have had to seek bailouts. Spaniards will go to the ballots on Sunday to vote for a new government. Opinion polls indicate that the opposition Popular Party will win Spain’s general election. The Spanish government sold 3.56 billion Euros worth of bonds out of a maximum target of 4bn euros. A similar auction in France saw French short-term borrowing costs – for its two and four-year bonds – also rise by about half a percentage point. (Read More)

Spain’s Economy Records Zero Growth
11 November 2011 – BBC News
Spain’s economic output between July and September was unchanged compared with the previous three months, and up just 0.8% from a year earlier. Domestic demand has continued to contract, although this was offset by a boost in export demand. Spain continues to worry investors because of concerns over the Spanish’s government ability to meet its debt payments in the face of weak growth.  The unemployment rate has lingered at 22%, meaning lower income tax revenues and more benefit payouts. Additionally, Spain’s borrowing costs have risen sharply in the last two months. (Read More)

IMF to Release New Rules for Currency Basket
11 November 2011 – Reuters – Luciana Lopez
The International Monetary Fund plans to release new criteria for currencies to enter its Special Drawing Rights (SDR) basket by the end of November. Some experts interpret the IMF’s move as a step towards including Brazil’s real and China’s yuan.  The inclusion of these two currencies would be important because the SDRs are a basket of currencies most global trade is settled in – US dollars, euros, Japanese yen and sterling. SDRs can be traded for one of the other currencies through voluntary trade arrangements among official SDR holders. (Read More)

Italian Death Spiral Might Draw in IMF
10 November 2011 – The Financial Times – Alan Beattie
As instability increases in Italian sovereign debt markets, the possibility rises again that the IMF will be called in by the new government. Policymakers say that getting the IMF involved, even if only to contribute credibility rather than liquidity, could help the European Central Bank overcome its reluctance to be seen financing a direct bailout for Rome.  The ECB does not have the capacity to do conditionality, so one idea is to let the ECB lend money to Italy through the IMF, allowing the IMF to take on the credit risk of lending to Rome. (Read More)

Russia Rules Out Direct EU Rescue Funds Outside IMF
9 November 2011 – The Economic Times – Nia Novosti
President Dmitry Medvedev’s top economic adviser said on Wednesday that Russia was not prepared to invest directly in the EU rescue fund and would prefer to help the Eurozone through the IMF. Russia has hesitated to commit without a similar promise from other sources and Arkady Dvorkovich said that the European Union needed to elaborate on its plan in more detail. However, Moscow has yet to make clear how it would help the Eurozone within the framework of the IMF. (Read More)

IMF Head Says Italy, Greece Need ‘Political Clarity’ about Leadership to Reassure Investors
10 November 2011 – The Washington Post–Associated Press
The chief of the International Monetary fund called on Italy and Greece to show “political clarity” about their debt crises, saying that uncertainty is fueling financial volatility. Christine Lagarde said Chinese leaders “are clearly concerned” about the Eurozone but she declined to discuss any details about a possible bailout from Beijing. The political chaos in Greece has spilled into Italy, where the key borrowing rate spiked at 7.4 percent – above the level at which Greece, Ireland, and Portugal were to seek bailouts. Chinese officials have said they want to know more about how the proposed fund will function before deciding whether to invest.  (Read More)

Eurozone’s Growth Has Stalled, Says EU
10 November 2011 – BBC News
The European Union has cut its growth forecast for the Eurozone in 2012, from 1.8% to 0.5%. The low growth makes it harder for Europe to escape its debt crisis, with Italy’s position seemingly unsustainable. European markets have remained uneasy on Thursday as concerns persisted about the high cost of borrowing faced by Italy. Italy’s cost of borrowing for one-year Italian bonds was up from 3.57% in October and was the highest for 14 years. The European Commission also predicted that if there were no changes in political policy, Italian public debt would remain unchanged at 120.5% of GDP next year, before falling to 118.7% in 2013. (Read More)

IMF Head is Counting on Russia
7 November 2011 – The Moscow Times – Irina Filatova
The head of the International Monetary Fund, Christine Lagarde, met with Russian president Dmitry Medvedvev on Monday during her first official foreign visit as IMF chief. The two leaders were set to discuss global economic issues and efforts by the international economic community to overcome the crisis. Russia is pushing for redistribution of the IMF membership quotas that determine the size of countries’ financial contributions and their voting power in the fund. Russia hopes that the implementation of previous agreements on IMF reform will strengthen both its position and that of other emerging economies in the organization. (Read More)

IMF, Romania Agree on Next Loan Tranche, 2012 Budget Limits
7 November 2011 – Bloomberg – Irina Savu and Andra Timu
Romania and the International Monetary Fund completed talks after a two-week review to release about 475 million euros in fund and reached an agreement on a target for next year’s budget. Romania has met all its targets at the end of September and plans to continue with a state-asset sale program.Romania plans to reduce its budget deficit to between 1.9 and 2.1 percent of GDP from an anticipated 4.4 percent this year to limits its financial burden. It does not plan to draw on the emergency funds, which will be stored by the IMF in Washington. The country’s export-driven economic recovery will slow down next year to growth between 1.8 and 2.3 percent because of slower global growth. (Read More)

Italy Borrowing Rates Hit New Record as Vote Looms
8 November 2011 – BBC News
The Italian government’s cost of borrowing has risen to a new record ahead of a crucial vote for Prime Minister Silvio Berlusconi. The yield on Italian 10-year bonds rose to 6.73, the highest since the country joined the Eurozone in 1999. Markets briefly rallied on Monday on incorrect reports that Berlusconi would step down. Short-term borrowing costs have been rising at an even faster rate. Italy has to rollover around 360bn euros of debt in 2012. Berlusconi announced on Monday that he would push through a round of reforms to appease financial markets. (Read More)

Special IMF Money Considered
4 November 2011 – The Wall Street Journal – Ian Talley
G20 leaders are considering mandating the International Monetary Fund to print more Special Drawing Rights (SDR) to help solve the Eurozone crisis. The G20 industrialized and developing countries has included in its plans to print more SDRs to supplement European efforts to stem the debt crisis. G20 leaders are pressing Eurozone leaders to deliver a credible plan to leverage their own bailout fund. People familiar with the matter said the SDR issue could total $250 billion. Essentially, the IMF would print and distribute a certain amount of SDRs to national central banks. Holding SDRs would help assure investors that a country had an extra source of reserves it can tap in an emergency. (Read More)

Stocks Higher on Greek Government Tumult
3 November 2011 – BBC News
European stock values have increased on hopes that a forthcoming referendum in Greece on the bailout package may now be cancelled. Prime Minister George Papandreou told parliament on Thursday that he would drop the plan if the opposition party agreed to support the bailout package. Major stock markets in Europe closed on Thursday with stock gains. The Dow Jones ended the day 1.8% higher. Bank shares - including those most exposed to Greek debt in France - jumped higher. Stock markets were also given a boost by the European Central Bank’s decision to cut interest rates to 1.25%. (Read More)

G20 Leaders Agree to Boost IMF Resources
4 November 2011 – BBC News
In a closing press conference, French President Nicolas Sarkozy said that, “the G20 will fight to defend Europe and the euro”. He said that the G20 has agreed to boost the resources of the IMF and would agree on a specific plan by February. British Prime Minister David Cameron said that it was essential that the IMF had the resources it needed to boost confidence and economic stability, but he emphasized that Britain will not contribute to any Eurozone bailout. Also during the summit, EU Commission President Jose Manuel Barroso said that Italy had asked the IMF to monitor the implementation of its economic reforms. (Read More)

Gillard Promises to Double IMF Quota
3 November 2011 – The Sydney Morning Herald – Paul Osborne
Prime Minister Julia Gillard will pledge a doubling of Australia’s support to the International Monetary Fund (IMF) when she meets with other G20 leaders in Cannes. Ms. Gillard will tell a session on reform of the IMF that Australia will double its special drawings rights (SDR) quota from $5.3 billion to $10.6 billion. Ms. Gillard plans to use her pledge to argue for an increase of IMF member country SDR quotas. An increase would also expand the influence in IMF decision-making of important market economies, especially those in Asia. (Read More)

Obama Calls for Urgent Debt Deal
3 November 2011 – BBC News
President Obama said on Thursday that the most important topic on the agenda was Europe’s problems. Obama said: “Here at the G20 we need to flesh out how the plan will be fully and decisively implemented.” A key part of the rescue package to be presented to the G20 was a plan to encourage wealthy emerging economies to contribute to enlarging the European Financial Stability Fund. However, China made it clear that it will not commit to such action until there was more clarity on the situation in Greece. (Read More)

Chinese President Meets IMF Managing Director
3 November 2011 – Xinhua News
Chinese President Hu Jintao met with Christine Lagarde, the managing director of the IMF on Wednesday in Cannes. President Hu congratulated the Ms. Lagarde for her successful appointment as managing director. He also thanked her for nominating Zhu Min as an IMF deputy director. Mr. Min served previously as special advisor to the managing director of the IMF and was deputy governor of China’s central bank. Hu and Lagarde met before the main G20 meetings planned for Thursday and Friday in Cannes. (Read More)

OECD Cuts Forecasts for US, Euro Zone
1 November 2011 – The Wall Street Journal – Gabrielle Parussini
The Organization of Economic Cooperation and Development slashed next year’s growth prediction of the US and the Eurozone and said that the economic outlook is likely to worsen unless Europe controls its sovereign-debt crisis. Advanced economies are looking at two years of high unemployment and weak growth. The International Labor Organization issued another similar report on Monday, saying that the global economy is on the brink of another recession. The OECD revised its forecasted growth of the US economy from 3.1% to 1.8%. The OECD expects Eurozone gross domestic product will expand 0.3% next year, down from the 2% growth it forecast in June. (Read More)

Eurozone Debt Crisis: Markets Dive on Greek Referendum
1 November 2011 – BBC News
Greece said on Monday that it will have a referendum on the bailout deal and European markets have fallen shortly after the announcement. The FTSE 100 in London traded down 2.9% while the Dax in Frankfurt fell 4.4%. Europe’s main share markets had all fallen before the announcement as well, with markets in London, Frankfurt, and Paris all dropping about 3% on Monday. Prime Minister told a meeting of his party that Greek people would have the final say on the package. There is concern that the referendum would not happen until January, which would create months of uncertainty. On the currency markets, the euro fell 1% against the US dollar and 0.4% against the pound. (Read More)

IMF Faces Discontent on Currency Appraisals
31 October 2011 – Bloomberg News – Sandrine Rastello
The International Monetary Fund has agreed to take into account other data when reviewing members’ external stability after facing dissatisfaction about how it assesses countries’ exchange rates. IMF staff said they faced continued discontent from economists and officials about the insufficient coverage of capital flows and reserve adequacy issues in their reports. IMF analysis of exchange rate has been a sensitive issue with some countries, including China, which prevented the publication of reports on that nation’s economy in 2007 and 2008. The Fund’s review also noted that the IMF currently has the most sway in countries that borrow from it and has less influence in the US and the EU. (Read More)

Eurozone Seeks Bailout Funds from China
28 October 2011 – BBC News
After meetings with Chinese leaders, Klaus Regling said there were no formal negotiations and would be no deal now. China may pay out about 70 billion euros into the European bailout fund. Beijing has made it clear that it wants strong guarantees on the safety of any of its potential contributions. Mr. Regling, the chief executive of the European Financial Stability Board, said he was only holding potential consultations to decide the terms of raising the money and pointed out that there should be no expected outcome from the talks. (Read More)

Bank Stocks Rally on Eurozone Crisis Deal
28 October 2011 – BBC News
Eurozone leaders on Thursday agreed to expand the European Financial Stability Board’s funds to 1 trillion euros, which resulted in a rally in financial markets. On Friday, Barclays rose 3.3% and Royal Bank of Scotland gained 2%. French and German banks also jumped sharply. The new deal introduced by EU leaders, raises the reserve requirement for European banks to protect themselves against losses from any future defaults. Under the deal, Greek debt would drop from 160% of GDP to 120% by 2020. American and Asian markets rose on Friday on hopes of a better financial outlook worldwide. (Read More)

George Osborne to Block IMF Cash for Eurozone Bailout
28 October 2011 – The Telegraph – Robert Winnett
George Osborne, Chancellor of the Exchequer, said he would not allow the International Monetary Fund, which is partly financed by Britain, to provide money for the new Eurozone bailout fund. Osborne ruled out IMF involvement amid indications that the international organization may be asked to support the fund to lend money to troubled countries in the single currency area. Many of the Eurosceptic members of parliament welcomed the Chancellor’s position and they are organizing an unofficial summit to draw a set of reforms they want the British government to extract from the EU. (Read More)

OECD: Inflation Threat in Brazil, Above Target Through 2013
26 October 2011 – Market News International – Daniel Horch
The OECD released a report on Wednesday saying that inflation seems a bigger threat to the Brazilian economy than the government wants to admit. The OECD’s latest Economic Survey of Brazil forecasts 6.5% inflation this year, 6.2% next year, and 5.1% in 2013, all above the central bank’s target. Additionally, the OECD cut Brazil’s GDP growth estimates, which are slightly lower than the estimates from Brazil’s Finance Ministry. The OECD warned that “risks for this scenario are on the downside and good economic performance in Brazil is contingent on a relatively benign scenario for the world economy.” (Read More)

G20 Action Needed After Euro Zone Deal: French Finance Minister
27 October 2011 – Reuters – Vicky Buffery
French Finance Minister Francois Baroin said on Thursday that wider measures are needed from next week’s G20 summit to keep the developed world from entering a recession. Baroin said the deal struck by the Eurozone members was a first step toward rebuilding confidence. However, he emphasized that the leaders of the G20 would have to take further measures when they meet for a summit next week in Cannes. In an effort to end the currency crisis, the Eurozone leaders struck a deal to accept a 50 percent loss on their Greek debt holdings and governments agreed to increase the lending capacity of the bailout fund to 1 trillion euros. (Read More)

Russia Gives Cool Welcome to Euro Summit Deal
27 October 2011 – Reuters – Douglas Busvine
Russia said on Thursday that it would prefer to provide aid to the currency union via the International Monetary Fund. A Russian official has expressed his skepticism by adding that “right now it’s difficult to say whether [Europe’s efforts] will be sufficient for the long term.” Russia has always been skeptical toward European governments providing support to the Eurozone or its individual members. Russia prefers to take a coordinated position with the other BRIC countries via the IMF. Russia officials have also said that there should be no delay to redistribute IMF quotas linked to their increased financial contribution, which should boost the say of emerging markets in the IMF’s decision-making.  (Read More)

Canada’s Carney Ready for FSB Regulator Limelight
24 October 2011 – Reuters – Louise Egan
Mark Carney prepares to become the head of the Financial Stability Board, the key driving force behind the reform of global financial regulation. Carney will replace Mario Draghi, who takes over as president of the European Central Bank on November 1. Carney headed the Bank of Canada during the recession and no Canadian Banks needed government help during the world financial crisis. Carney intends to stay on as Bank of Canada governor, but if the revamped FSB requires a full-time chair, he may have to abandon the bank before his mandate expires in 2015. (Read More)

Europe Considering EU Treaty Changes, Decision on EFSF Likely on Wednesday
24 October 2011 – RTT News
European leaders announced on Sunday that they are considering ‘limited’ changes to the European Union Treaty along with further strengthening of economic convergence within the euro area. The European Commission President, Jose Manuel Barroso, said that a decision on increasing the capacity of the European Financial Stability Facilitywould be taken on Wednesday. The European Council also said that the work on reinforcing the banking sector will be finalized at its meeting on Wednesday. (Read More)

Eurozone Rescue Plan Hits New Hitch
25 October 2011 – BBC News
The Polish presidency of the European Union has confirmed that the meetings on Wednesday have been postponed. The EU’s 27 finance ministers and the 17-nation Eurozone will not meet on October 26 as previously planned. The delay could stall agreements about how to enlarge the European Financial Stability Facility. Wednesday’s meeting would agree broad principles of Eurozone rescue, but subsequent meetings of finance ministers would finalize details. The emergency summit and dinner involving the 17 Eurozone nations will continue as planned. (Read More)

Greek MPs Pass Austerity Measures
20 October 2011 – BBC News
All but one of the deputies from the Pasok party voted in favor of the new austerity measures. The approval comes amidst a new wave of violent protests against the provisions in Athens. The government’s bill is needed to secure bailouts loans from the IMF and the EU. The bill includes plans for further cuts to pensions and salaries and temporary layoffs of public sector workers. Greece says it needs the next 8 billion euros of the first bailout agreed to last year or it will soon be unable to pay its bills. EU leaders and global financial chiefs are still working out the details of the second rescue plan. (Read More)

Rice Says IMF Watching Protests in Greece “With Concern”
20 October 2011 – Bloomberg News – Ian Katz
An IMF spokesman said the Fund is concerned about the new demonstrations in Greece. Gerry Rice, the Fund’s acting director for external relations, told reports in Washington that the Fund understands that these are difficult times for the people of Greece. Protestors clashed with police for a second day outside the parliament building in Athens. Rice said the IMF is working with the European Commission and the European Central Bank on Greece to deliver a plan for a second bailout as soon as possible. (Read More)

Watchdogs to Keep Closer Eye on Ultra-Fast Trading
20 October 2011 – Reuters – Huw Jones
The International Organization of Securities Commissions (IOSCO) published guidelines on Thursday to better monitor automated financial transactions, but said there is little supporting evidence to justify controlling high frequency trading (HFT). HFT accounted for 56 percent of US and 36 percent of European equity volume last year. Although there is no agreed definition, HFT typically involves algorithms that instruct ultra-fast computers to trade across assets to exploit small price changes. The IOSCO report said that direct electronic access to markets was an area where HFT may pose the greatest risks. IOSCO’s guidelines focus on closer monitoring of HFT rather than trying to stop it. (Read More)

World Awaits Deal from Euro Showdown
20 October 2011 – European Voice – Ian Wishart
The EU’s national leaders will meet in Brussels this weekend, with many hoping that the summit will result in a resolution to the current eurozone crisis. The goals of the meeting are to draft a plan for boosting the now-approved bailout fund, recapitalizing banks, and finding lenders to help out Greece. Disagreements this week between Germany and France, with regard to both substantive issues and whether or not one should even be optimistic about the meeting itself, have cast doubts upon the leaders’ ability to create a comprehensive plan this weekend. (Read More)

EU Institutions Hit Back at Markets, Ratings Agencies
20 October 2011 – EU Observer – Andrew Rettman
EU institutions are attempting to temporarily silence ratings agencies, this coming shortly after Spain received multiple downgrades and France received warnings that it could see its own downgrades in the following months. A new law being drafted would gag ratings agencies at “inopportune moments,” preventing agencies from downgrading countries when such news could have significantly negative effects on markets. The law could come into effect as soon as next autumn. (Read More)

Market Nerves Over Euro Strategy

20 October 2011 – BBC News
After a meeting with German Chancellor Angela Merkel, French President Nicolas Sarkozy was reported to have said that the two countries disagreed over a rescue plan. Markets in London, Germany, and France have fallen in the aftermath of the announcement. Earlier this month, France and Germany said they had a plan to address the Eurozone debt and would give more details by the end of the month. EU leaders are set to meet on Sunday after the scheduled meeting for 17-18 October was delayed because more time was needed to finalize a plan. (Read More)

Germany Cuts Economic Growth Forecast for 2012
20 October 2011 – BBC News
The German government announced it now expected the economy to grow by 1% in 2012, down from its previous forecast of 1.8%. Germany’s leading economic institutes predicted that growth would slow to almost zero in the fourth quarter of 2011 and the country would only narrowly avoid a technical recession. The German economy is export-driven but government officials expected to see domestic demand becoming increasingly important. The decline in demand for German exports comes as no surprise as the risk from the international environment has had an impact on global demand. Germany hopes that domestic demand will become the pillar of economic growth in the future. (Read More)

IMF and EU at Odds Over Greek Debt Sustainability
20 October 2011 – Reuters
The International Monetary Fund disagrees with EU projections on Greece’s debt sustainability and wants to wait until a clearer outlook emerges before approving the next tranche of financial support for Athens. IMF officials said that the EU’s debt projections are too optimistic and said they want to wait after the Eurozone summit on Sunday to see if discussions there provide a clearer picture. A report indicating whether Greece is doing enough to cut its budget deficit to justify receiving the next installment of aid has been delayed until the day after the summit on October 23. (Read More)

European Commission to Promote EU Broadband Investment

15 October 2011 – BBC News – David Meyer
The European Commission will propose an investment of $12.6 billion in the continent’s broadband internet capabilities, aiming to  stimulate investment in rural broadband and making the continent “more competitive and productive.” The money would be invested between 2014 and 2020, and would aim to have all European households on at least a 30 Mbps connection, with half the population at 100 Mbps or faster. As a point of comparison, the average US broadband speed is 4.9 Mbps. (Read More)

OECD Gurria: Confident of Euro-Zone Deal by Cannes G-20 Meeting
14 October 2011 – The Wall Street Journal – Jason Douglas
The secretary-general of the Organization of Economic Cooperation and Development said Friday that he is confident that European leaders will reach an agreement on handling the continent’s debt crisis in time for a meeting of the G-20 in Cannes on November 3 and 4. Angel Gurria told BBC News that policy makers have agreed on two aspects of a three-point plan to tackle the sovereign debt crisis. Gurria said they have agreed that a write-off of Greece’s debt is needed and they have agreed to recapitalize banks affected by the crisis. (Read More)

Slovakia Votes to Bolster Europe Bailout Fund
14 October 2011 – The San Francisco Chronicle – Janet Stobart
The Slovak parliament approved an expansion of the EU’s bailout fund on Thursday. The expansion of the bailout fund needed the support of all 17 Eurozone nations, which had already endorsed the expansion before Tuesday when Slovakia’s parliament rejected the bill. Because of Tuesday’s vote, Prime Minister Iveta Radicova’s government collapsed. In return for early elections, the opposition SMER party gave its approval Thursday, and the measure passed by a 114-30 vote. Radicova’s government will resign after barely a year in power, but it will still in power until the new elections in March. (Read More)

European Banks May Need to Raise 200bn Euros
13 October 2011 – BBC News
The European Banking Authority (EBA), Europe’s banking industry regulator, wants European banks to have more funds in reserve to protect them from any future shocks in the financial markets. EBA wants banks to boost their capital reserves to between 9% and 10% of their overall assets. According to BBC business editor Robert Patterson, banks may struggle to raise the money from private sources and the government may have to provide the funds in many cases. (Read More)

EU Pushes Bank Plan
13 October 2011 – Wall Street Journal – Matthew Dalton and Laurence Norman
The European Commission on Wednesday set out proposals to prop up European banks in the face of the region’s worsening sovereign debt crisis. The commission’s release contains a number of old ideas that had already been announced and some new ideas. The commission emphasized the need for tougher reviews of the region’s banks using a temporary higher capital ratio. Banks with inadequate capital will need to raise it from private sources if possible, but governments will be available as a last resort. The commission said regulators should use the definition of capital used in the Basel III banking rules when examining whether banks have enough of this type of capital on their balance sheets. (Read More)

Slovak Drama Shines Light on Euro Decision
13 October 2011 – The Boston Globe – Don Melvin
Slovakia’s rejection of Europe’s expanded bailout fund has shown the problems in the EU’s decision-making process. Slovakia is the only country in the Eurozone that has not approved the bailout bill because of domestic political disputes that triggered the government’s collapse on Tuesday. The main parties reached a deal yesterday to approve the fund by tomorrow, but the drama has left many officials wondering if the EU can continue to operate in its current form. Many observers think the Eurozone’s decision-making process is too slow, and many analysts believe that the euro currency may not ultimately survive unless decision-making becomes more centralized and quick. (Read More)

UK at Risk as OECD Signals in Pace of Global Economic Slowdown
11 October 2011 – The Independent – Ben Chu
According to the latest survey by the Organization for Economic Cooperation and Development, the global economy continues to weaken. The OECD’s monthly composite of leading indicators (CLI) fell for the fifth consecutive month in August signaling a sharp slowdown in economic activity around the globe. A new survey by the British Chamber of Commerce also shows a weakening across the UK business sector. The UK, Canada, France, Italy all showedoutput below their long-term trend. The OECD’s forecast echoes the IMF’s warning that growth in the advanced economies will slow to 1.6 percent in 2011. (Read More)

Slovakia Fails to Agree on European Bailout Fund
10 October 2011 – CBS News – Adam Pemble
Slovakia’s governing coalition failed on Monday to strike a deal to prevent the collapse of a plan to rescue indebted European nations. The 17 nations in the Eurozone must approve expanding the powers of the bailout fund. Sixteen governments already have approved the package. The coalition will continue talks on Tuesday, the day Slovakia’s parliament is scheduled to vote on the EU bailout fund. (Read More)

Greece Payout Likely to Go Ahead
11 October 2011 – BBC News
Greece, the EU, IMF, and the European Central Bank have agreed on economic and financial policies to put the Greek nation back on track. According to these institutions, Greece will not meet its fiscal target for 2011 because of a drop in its GDP and because of slippages in the implementation of some of the agreed measures. Greece is likely to get 8bn euros in November. Some 5.8 euros would come from the euro area members, and another 2.2 billion from the International Monetary Fund. (Read More)

OECD Urges ECB Rate Cuts to Boost Growth
6 October 2011 – Reuters – Bryan Rohan
OECD Secretary General Angel Gurria said on Thursday that Europe must take concerted action to boost growth – including cutting interest rates – to avoid a recession. The ECB decided on Thursday to leave rates unchanged at 1.5 percent despite signs of a slowdown in the European economy. The OECD has cut its growth forecasts for the developed world and said governments must take action to restore confidence. According to Gurria, even if Europe avoids a recession, weak growth would not be enough to protect populations from growing unemployment. (Read More)

Germany’s Merkel Again Hints at European Bank Recapitalization Amid Debt Crisis
6 October 2011- The Washington Post
German Chancellor Angela Merkel emphasized on Thursday that European governments should consider bolstering banks’ financial buffers. Merkel spoke at a news conference in Berlin with the heads of the International Monetary Fund and the World Bank. When asked if the IMF had enough funds available to deal with the crisis, Christina Lagarde said the fund had resources it could deploy but did not specify the amount. Thursday’s meeting also included the president of the European Central Bank and finance ministers from France, Germany, and Mexico. The meeting in Berlin is linked to a German-Mexican initiative on reform of international currency markets by the G-20. (Read More)

Greece Bailout Talks Not Ended Yet: Troika Official
6 October 2011 – Reuters – Angeliki Koutantou
Inspectors from the European Union, the International Monetary Fund and the European Central Bank, known as the troika, resumed their review of Greece’s progress on a bailout deal last week. Greece’s finance minister, Evangelos Venizelos, announced that bailout talks with the IMF had ended and would continue talks with European Commission on Friday. A senior official from the troika said that the Greek aid tranche was likely to be approved but that Greece must first do more to convince its lenders that it can implement reforms. (Read More)

IMF Considers Plan to Purchase European Bonds
6 October 2011 – The Wall Street Journal – Riva Froymovich and Marcus Walker
New initiatives emerged Wednesday as part of efforts to stop Europe’s sovereign-debt and banking crises. Germany pushed a proposal to encourage the euro-zone’s national authorities to announce backstops if their banks hit difficulties. The head of the IMF’s Europe division, Antonio Borges, announced in Brussels that the IMF could step into the bond markets in Europe in an effort to increase market confidence. However, the proposal is a long way from becoming a fact. Many of the IMF’s members believe that Europe has enough resources to resolve the crisis on its own. (Read More)

EU Commission to Call for Global Transaction Tax at G20
6 October 2011 – Reuters – Robin Emmott
The European Commission will push for an agreement on a global financial transaction tax at the meeting of G20 leaders in Cannes next month. On Wednesday, Jose Manuel Barroso announced that, “Angela Merkel an

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