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Summit To Step Up Action On Greek Finance …

  • July 17th, 2011
  • Posted by EUEditor

eu-money-ec.jpgEuropean government leaders are to meet at Brussels on Thursday, 21.7.11, to try to settle on a second stage of the bail-out plan for the Greek government, in its debt crisis.

This was announced on a day when Europe’s banks were getting their reports on financial “stress tests”, and the Italian parliament was approving a tight budget, designed to help ease pressure on the finance sector.

HIGH LEVEL CONFERENCE ON MONEY FOR GREECE

The President of the European Council, Hubert Von Rompuy, announcing the special summit, said on Friday: “Our agenda will be the financial stability of the Euro area as a whole and the future financing of the Greek program.”

The 17 countries using the Euro will be represented

Greece received €10-billion (A$146.18-billion; xe.com, 16.7.11) from the European Union and the International Monetary Fund last year, providing access to funds at lesser rates of interest, after commercial markets down-graded the credit rating of the country’s state borrowers.

More is required as the small economy struggles to sustain interest payments, and contracts as austerity measures close down jobs and government services.

CHECKING ON THE BANKS

At the same time, 15.7.11, it was announced that two banks in Greece had failed the stress test conducted by the European Banking Authority (EBA), to measure the strength of their capital holdings.

Altogether 90 banks handed over their accounts for the check-up in 21 countries, representing 65% of total bank assets.

All of the larger banks passed the test of credit requirements; eight failed altogether, and 16 were classed as being in a marginal state.

Five failed in Spain and one in Austria.

The testing process is intended to cause banks to keep their balances intact, sufficient to withstand a financial crisis like the crisis of 2008.

It forms part of a general plan of coordinated action, devised since 2008, including early warnings for times when the system begins to falter.

See EUAustralia Online, “Moves on debt contagion and Italy”, 15.7.11.

ITALY BUDGET VOTE

On the same date, the Italian parliament passed an austerity budget including a public sector wage freeze and new bank taxes, aimed at reducing the budget deficit, moving towards a surplus in 2014.

It had been anxiously watched, with fears that the Greek debt situation would soon affect lending in Italy, a much larger  economy.

The new budget has provided lenders with reassurance about the country’s financial stability.

Reference

BBC News, London, “Eight banks fail EU stress test with 16 in danger zone”, 15.7.11. http://www.bbc.co.uk/news/business-14169940, (16.7.11).

WSJ, NY, “Italy Parliament Approves Bill To Balance Budget By 2014”, 15.7.11.
http://online.wsj.com/article/BT-CO-20110715-711227.html, (16.7.11).

Deutsche Welle, Bonn, “Greece: Eurozone to push for Greek bailout deal in snap summit”, 16.7.11. http://www.dw-world.de/, (16.7.11).

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