Browsing all articles tagged with Wolfgang Schaeuble

Record Unemployment Low Inflation Highlight Europe’s Pain

Unemployment has reached a new high in the euro zone and inflation remains well beneath the European Central Bank’s target, pacing pressure on EU leaders and the ECB for action to stimulate the bloc’s sickly economy.

Joblessness in the 17 nation currency area climbed to 12.2 percent in April, EU statistics office Eurostat stated on Friday spoting a new record since the data series began in 1995.

With the euro zone in its greatest recession since its creation in 1999, consumer price inflation was far lower the ECB’s target of just below 2 percent, coming in at 1.4 percent in May slightly higher then April’s 1.2 percent rate.

That augment may quieten concerns regarding deflation, however the deepening unemployment crisis is a threat to the social fabric of the euro zone. Almost two-thirds of young Greeks are not capable to find work exemplifying southern Europe’s lost generation.

Policymakers and economists including Germany’s finance minister Wolfgang Schaeuble have stated the greatest menace to the unity of the euro zone is now social collapse from the crisis, rather than market-driven factors.

In France, Europe’s second biggest economy, the number of jobless rose to a record in April while in Italy the unemployment rate hit its highest level in at least 36 years, with 40 percent of young people out of work.

Thousands of demonstrators from the anti-capitalist Blockupy movement cut off access to the ECB in Frankfurt on Friday to protest against policymakers handling of Europe’s debt crisis.

Some economists suppose the ECB, which meets on June 6 will have to go beyond an additional interest rate cut and consider a US style money printing program to breathe life into the economy.

Nick Matthews, a senior economist at Nomura International in London said we do not expect a strong recovery in the euro zone. It puts pressure on the ECB to deliver even more conventional and non conventional measures.


G20 Urges EU to Complete Banking Union Fast, Germany Digs in Heels

World financial leaders support the European Union on Friday to rapidly complete its banking union to help growth, however Germany stood firm that the next step toward such a union be through a risky and lengthy process a change of EU law.

The banking union is one of the key projects to improve the economy of the 17 countries sharing the euro, it would assist eliminate many of the problems that now hold back the flow of credit needed to finance a euro zone economic recovery.

Finance ministers and central bankers from the G20 leading economies said in a statement that the euro area the foundations of monetary and economic union should be enhanced, including through an urgent movement towards banking union.

The EU has previously made the first step it agreed that the European Central Bank would take over the administration of all banks in the euro zone from July 2014 in what is called the Single Supervisory Mechanism.

The next step is to agree how the euro zone will deal with closing down failed banks and how it will pay for that in the provisional period before enough fees from the financial industry accrue to cover the potential expense.

The idea is to use the euro zone bailout fund, the European constancy Mechanism to provide the necessary money for resolving failed banks in that era, however that means the use of euro zone taxpayers money.

The German government, which faces elections in September, consider that without a treaty change the potential use of German taxpayer money for winding down a bank in another euro zone state could give grounds to query it in the German constitutional court.

Wolfgang Schaeuble, German Finance Minister told reporters earlier on Friday that the German government is willing to change the treaties, the sooner, the better.

He said we should do what is necessary appropriately, one must have the strength to do so. The German government is strongly determined to go this way, there was a prospect the changes could be introduced through a simplified procedure to speed the process.


Cyprus Bank Particulars Heavy Losses for Major European bank Customers

Foremost depositors in Cyprus’s largest bank will lose about 60 percent of savings over 100,000 euros, sharpening the terms of a bailout that has surprised European banks however saved the island from bankruptcy.

preliminary signs that huge depositors in Bank of Cyprus would take a strike of 30 to 40 percent the first time the euro zone has made bank customers added to a bailout had previously unnerved investors in European lenders this week.

The strength of the conditions sends a clear signal that the bailout means the end of Cyprus as a center for offshore finance and could accelerate economic turn down on the island and bring steeper job losses.

Banks reopened to relative calm on Thursday following the imposition of the initial capital controls the euro has seen since it was launched a decade ago.

Tryfonas Neokleous, owner of a clothes shop on a cobbled street in the center of the city said that the Europe should not have allowed this disaster to happen here. Cyprus was heaven and they have turned it into hell.

He further said that he didn’t except business to pick up even now that the banks were open again following an approximately two-week shutdown.

He don’t anticipate anything and he don’t expect for anything anymore. People are going to spend their money on food and the whole thing else they have been depressed of the last 15 days.

There are no symbols for now that bank customers in other struggling euro zone countries like Italy, Greece or Spain taking fright at the precedent set by the bailout.

German Finance Minister Wolfgang Schaeuble informed German mass selling daily Bild that savings accounts in Europe are safe Cyprus is and will remain a special one off case.

European representatives have worked hard this week to stress that the island’s bailout was a exceptional case following a proposal by Euro  group chairman Jeroen Dijsselbloem that the rescue would serve as a model for potential crises rattled European financial markets.


Cyprus settled A Final Deal With International Lenders To Close Bank, Force Losses

Cyprus settled a final deal with international lenders to pack up its second greatest bank and caused serious losses on uninsured depositors including wealthy Russians, in return for a 10 billion euro  which is equal to $13 billion bailout.

The contract came hours prior to a time limit to prevent a collapse of the banking system in fraught discussions among heads of the European Union and President Nicos Anastasiades, the International Monetary Fund and the European Central Bank.

Rapidly authorized by euro zone finance ministers, the plan will spare the Mediterranean island a financial render down by twisting down the largely state owned admired Bank of Cyprus which is also known as Laiki, and switching deposits lower than 100,000 euros to the Bank of Cyprus to create a good bank.

Deposits over 100,000 euros in both banks, which are not assured under EU law will be frozen and used to determine Laiki’s debts and recapitalized Bank of Cyprus through a deposit/equity exchange.

Jeroen Dijssebloem, Eurogroup chairman said that the attack on uninsured Laiki depositors is expected to lift 4.2 billion euros.

Bank of Cyprus will effectively be shuttered with thousands of job losses. Representative stated senior bondholders in Laiki would be wash out and those in Bank of Cyprus would have to make an input.

An EU presenter stated no across-the-board tariff or tax would be imposed on deposits in Cypriot banks, even though the strike on large account holders in the two major banks is probable to be far superior than originally planned. A first attempt at a deal previous week distorted when the Cypriot parliament discarded a proposed levy on all deposits.

Christos Stylianides, Cyprus government presenter said that they prevent a uncontrollable bankruptcy which would have directed to an exit of Cyprus from the euro zone with unforeseeable consequences.

Wolfgang Schaeuble, German Finance Minister said that the Cypriot officials would not require to vote on the new scheme, as they had previously passed a law setting procedures for bank declaration.

The IMF and EU required that Cyprus lift 5.8 billion euros from its banking sector towards its own financial rescue in return for 10 billion euros in international loans. The head of the EU rescue fund stated Cyprus should obtain the first emergency funds in May.

IMF chief Christine Lagarde stated that the agreement was a credible and comprehensive plan that concentrate on the core problem of the banking system. This contract provides the basis for returning trust in the banking system, which is key to following growth.


ECB’s Nowotny Cautiously Hopeful Regarding 2013

Ewald Nowotny, European Central Bank rate setter said that the actions were taken this year by official to address the economic crisis in the euro zone tolerate cautious optimism regarding 2013.

Nowotny welcomed the begin of a permanent rescue fund for stressed euro zone countries, a structure for common bank supervision by the ECB, and a deal to carry on supplying aid to Greece.

Nowotny said in a statement altogether these are significant measures that allow for cautious optimism for a way out of the crisis in 2013.

His attitude strike with comments on Thursday by German Finance Minister Wolfgang Schaeuble, who stated that the worst of the debt crisis appeared to be over.

Both men also worried on the need for euro zone states to stick with tight fiscal policies.

Schaeuble stated he was confident France would depress on with its efforts to stop its debt burden expanding.

Nowotny, who is also a heads of Austria’s central bank, stated the government in Vienna required to bring down its public debt level, which he expected to increase to 75 percent of GDP next year.

He further said that in the view point of the central bank this level is obviously too high. It is therefore crucial to carry on pushing for consolidation. We expect that this path will not be discarded in 2013, an election year.

Nowotny also stated he expected Austrian inflation to drop below 2 percent in the coming two years amid signs of an economic growth.

Schaeuble stated he anticipated Germany’s economy to expand at a decent rate during the coming year underpinned by exports remote to the countries.


German lawmakers Approves Revised Bill on Greece Aid

German Parliament approved Greece’s current rescue package as Finance Minister Wolfgang Schaeuble cautioned that a default in the country where the debt crisis started could generate the collapse of the single currency.

Schaeuble stated in a speech to the Bundestag in Berlin that the potential effects of a Greek default on other euro states would be critical in truth the penalty would be unpredictable. It could activate a process at the end of which the entire euro zone could break apart.

The channel caps a year in which Chancellor Angela Merkel has had to pack down criticism within her ranks over shifts to Greece and suppress calls to force out the country from the euro.

Officials in Merkel’s coalition and opposition leaders this week mention the agreement in Brussels to give Greece additional time to meet budget targets. The agreement met Germany’s condition on ruling out a debt write off for Greece that would be experience by creditor countries taxpayers.

Evaluating Greece with eastern Europe following the collapse of the Soviet Union, Schaeuble said crisis hostility efforts are working as European leaders drives through a new package designed to ease terms for bailout aid for Greece and help to resolve the three year old debt crisis.

Unemployment in the euro zone increased to 11.7 percent from 11.6 percent in this September, according to the European Union’s information office.

Schaeuble said that the Greek population has had to tolerate a heavy burden. However if the Greek people are prepared to carry the burden, we were ready to help.