EU asks new austerity in Athens: frozen to the roof of the bank bonds – The Messenger

Among Italy’s veto and the insistence of Germany, European Union finance ministers yesterday were split on the possibility of introducing a ceiling to ‘ exposure of banks to government bonds. There are two sides, said the President of the Eurogroup, Jeroen Dijsselbloem, at the end of the first informal Ecofin meeting in Amsterdam: “Some ministers stressed the importance of doing so at the international level, if not global. Others have said that in the euro area there are reasons to move forward separately. ” According Dijsselbloem, “there is a strong link” between the European deposit-guarantee scheme which serves to complete the banking union and the reduction of sovereign risk for the banking sector. But “it is not an issue that will be resolved in one night. It will take time. ” “I do not think there is a common position,” confirmed the Bank of Italy governor Ignazio Visco: “Before changing the current system must realize and emphasize that between 2011 and today much has been done on the regulatory plan.” For Italy, “no to the roof of government bonds it is mandatory and unconditional,” explain sources of the Treasury. Thursday night from New York, the Prime Minister, Matteo Renzi, had explained that “there is no chance that you accept a ritch on government bonds without an overall strategy.”

two sides
 Germany is at the forefront in the tug exposure of banks to sovereign risk. Berlin threatens to block the adoption of a European deposit guarantee scheme, the ECB, the Commission and other countries clamoring to complete the banking union and get to allotment from the danger of a new crisis in the financial sector. The German finance minister, Schaeuble, has managed to pull together a group of Nordic countries. But also the traditional face of austerity is split. “We must ensure that any solution will not limit access to markets in themes of difficulty”, said Slovak Peter Kazimir. Also Commission and European Central Bank are cautious and urge caution. It would be “meaningless proceed unilaterally,” said the Commissioner for Financial Services, Jonathan Hill, asking that the matter be dealt with before the Basel Committee. The vice president of the ECB, Vitor Constancio, said that “the risk reduction measures have an impact on monetary policy.” Assign a risk to sovereign debt would result in a re-pricing of all titles with the risk of destabilizing the financial system. The prudential treatment of public debt “we must pay particular attention to financial stability,” warned the Commission Vice-President, Valdis Dombrovskis.

THE DEFICIT ELLENICO
 Meanwhile, the Eurogroup has taken a step toward an agreement with Greece to unlock new aid and give a discount on the debt. But European creditors and the IMF require guarantees from Tsipras government. In addition to measures amounting to 3% of GDP already included in the bailout program, Athens will have to adopt another “contingency package” of 2% of GDP by automatically trigger if you do not expect to achieve the primary surplus targets (3.5 % by 2018). IMF and Eurogroup not trust. Dijsselbloem has nevertheless been mandated to prepare the different options on debt restructuring. “There is no support for a cut of the nominal value,” explained the President of the Eurogroup. The hypothesis on the table is an extension of maturities and the grace period on interest payments. If Athens will agree to take the preventive austerity measures, an agreement could be an extraordinary Eurogroup Thursday. But once again with Greece to Tsipras the outcome is not a foregone conclusion: “In Greek law, can not approve of contingency measures,” said Minister of Finance greek, Tsakalotos.
 

 04/23/2016 00:00:00

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