Arab Today, arab today central bank may be winner in europe’s debt talks
Last Updated : GMT 21:44:24
Arab Today, arab today
Arab Today, arab today

Central bank may be winner in Europe’s debt talks

Arab Today, arab today

Arab Today, arab today Central bank may be winner in Europe’s debt talks

London - Tehran

Chancellor Angela Merkel of Germany and other European leaders appeared to act in defiance of the European Central Bank when they insisted that banks contribute to the latest rescue plan for Greece. But the central bank president, Jean-Claude Trichet, may consider himself the real winner of the week. It is true the central bank lost its fight to prevent European leaders from precipitating a partial default of Greek debt. After meeting with Ms. Merkel and other leaders in Brussels on Thursday, though, Mr. Trichet appeared to have prevailed on important points. Governments agreed to reclaim the task of preventing collapse of the Greek economy and to take responsibility for fiscal performance of the euro zone, tasks that the central bank did not want. “Have they backed down?” asked Peter Westaway, chief European economist at Nomura International, about the central bank’s position on a default. “To an extent they have.” In turn, the central bank will be able to spend less time saving Greece and concentrate on its day job, overseeing monetary policy. “The E.C.B. is trying to resist anything that makes it look like monetary authorities are taking on a role that governments should be taking on,” Mr. Westaway said. Mr. Trichet won commitments from governments on another longstanding issue. Political leaders in Brussels agreed to take more concrete steps to reduce their debt and to ensure that the Greek disaster is not repeated elsewhere. Euro zone countries promised to cut their budget deficits to below 3 percent of each country’s annual output by 2013, in line with limits set by treaty, but widely violated. The European countries also agreed to support Greek banks, a task that has been handled up to now primarily by the central bank. And the leaders will do more to help Greece fix its dysfunctional economy. “The decision of member states and of the commission to mobilize all resources necessary in order to provide exceptional assistance to help Greece in implementing its reforms is very, very important,” Mr. Trichet said in Brussels on Thursday, according to Reuters. A high-ranking monetary policy official, who would not be quoted by name, said, “We got what we wanted.” Since the debt crisis began last year, there has been a strong temptation by Ms. Merkel, President Nicolas Sarkozy of France and other leaders to leave the heavy lifting to the central bank. Unlike the politicians, Mr. Trichet and his colleagues on the governing council cannot be voted out of office. The central bank also has extensive financial resources and does not need an act of Parliament to deploy them — though it took pains to avoid the appearance that it was printing money. Even as Mr. Trichet framed his actions in terms of monetary policy, he faced increasing criticism that the central bank had compromised its sacred independence from politics. He was clearly annoyed at political leaders for their lack of decisive action. During a meeting last year, he got into a shouting match with Mr. Sarkozy, according to several people who attended. The package announced in Brussels late Thursday would shift responsibility for a number of major tasks from the central bank to governments. For example, the European Financial Stability Fund would have the power to buy government bonds on open markets to stabilize prices, allowing the central bank to wind down its own controversial bond-buying program. The decision in May 2010 by the central bank to begin buying Greek, Portuguese and Irish bonds split the bank’s governing council and has left the bank with billions in distressed debt. “It is no longer necessary for the E.C.B. to do this job, which is a plus for the E.C.B.,” Jörg Krämer, chief economist at Commerzbank, said in Frankfurt. European leaders will also guarantee the quality of Greek bonds even if some ratings agencies declare the country to be in partial default. Fitch Ratings said Friday that the plan to extract a contribution from bond investors would constitute a restricted default. The guarantees by the European Union mean that the central bank can continue to accept Greek bonds as collateral for short-term loans, maintaining the flow of the bank’s funds to Greek institutions that are shut out of international money markets. “In our view this is a very important sign of institutional respect from Europe to the E.C.B.,” analysts at Royal Bank of Scotland wrote in a note Friday. Analysts cautioned that the rescue plan, outlined in a four-page statement by European leaders Thursday, was short on detail. It is not clear, for example, if the euro zone countries are committing enough money to support the Greek banks, Mr. Krämer of Commerzbank said. He was also skeptical of promises by leaders to do a better job policing each other’s fiscal discipline. “I have heard this for 15 years,” Mr. Krämer said. “I don’t believe it. The E.U. is a consensus-driven club. You can’t force other countries to do this or that.” Jens Weidmann, president of the German Bundesbank and a member of the central bank’s governing council, implicitly greeted the greater willingness by leaders to take more responsibility. “It is decisive for monetary policy during this sovereign debt crisis that no further risk be transferred to the Eurosystem, and that the separation between monetary and financial policy not be further weakened,” Mr. Weidmann said in a statement, referring to the network of European central banks. But, in a sign that not all members of the governing council are happy with the agreement, Mr. Weidmann criticized what he called a major step toward collective responsibility for the mistakes of individual states. “This weakens the fundament of a monetary union built on individual fiscal responsibility,” Mr. Weidmann said in a statement. “In the future it will be even more difficult to maintain incentives for solid financial policy.”

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today central bank may be winner in europe’s debt talks Arab Today, arab today central bank may be winner in europe’s debt talks

 



Arab Today, arab today
Arab Today, arab today Nohan Seyam designs beautiful accessories

GMT 20:02 2017 Tuesday ,21 February

Nohan Seyam designs beautiful accessories
Arab Today, arab today Tourism shows signs of recovery

GMT 09:59 2017 Monday ,20 February

Tourism shows signs of recovery
Arab Today, arab today Sarah Belamesh designs antiques of "ceramic"

GMT 19:45 2017 Monday ,20 February

Sarah Belamesh designs antiques of "ceramic"
Arab Today, arab today 11 family members dead in rebel push

GMT 07:57 2017 Tuesday ,21 February

11 family members dead in rebel push
Arab Today, arab today To probe sexual harassment claims

GMT 10:08 2017 Tuesday ,21 February

To probe sexual harassment claims

GMT 14:57 2017 Monday ,20 February

A giant initial public offering on track

GMT 14:50 2017 Monday ,20 February

Energy Market Research

GMT 09:38 2017 Monday ,20 February

Japan returns to trade deficit in January

GMT 07:16 2017 Monday ,20 February

Global arms trade highest since Cold War

GMT 06:10 2017 Monday ,20 February

Tourism shows signs of recovery in Egypt

GMT 05:45 2017 Monday ,20 February

Brexit U-turn ruled out by many in EU
View News in Arabic - Business: نفط وبتروكيماويات
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today 57 monkeys carrying 'invasive' genes

GMT 16:00 2017 Tuesday ,21 February

57 monkeys carrying 'invasive' genes
Arab Today, arab today 63-Year-Old Woman Delivers Baby

GMT 12:35 2017 Tuesday ,21 February

63-Year-Old Woman Delivers Baby
Arab Today, arab today Small ponds have outsized impact

GMT 15:53 2017 Tuesday ,21 February

Small ponds have outsized impact
Arab Today, arab today Pluto's unruly moons

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons
Arab Today, arab today Nissan enhances sales in most markets

GMT 14:08 2017 Monday ,20 February

Nissan enhances sales in most markets
Arab Today, arab today Competes Sweden and Germans by S90

GMT 22:36 2017 Thursday ,16 February

Competes Sweden and Germans by S90
Arab Today, arab today Ahmed Fahmy stresses he did not ignore singing

GMT 06:34 2017 Sunday ,19 February

Ahmed Fahmy stresses he did not ignore singing
Arab Today, arab today London to tax old cars

GMT 14:06 2017 Friday ,17 February

London to tax old cars

GMT 21:11 2017 Saturday ,18 February

Egypt to hold first session of Arab film festival

GMT 06:50 2017 Wednesday ,15 February

Tragic fluctuations of Bakhtiari's life revealed

GMT 12:22 2017 Monday ,20 February

Kanye West puts hijab-wearing model

GMT 20:41 2017 Wednesday ,15 February

Teach monkeys to recognize themselves in mirror

GMT 23:29 2017 Thursday ,16 February

Home built on sand castles-style costs $8m

GMT 14:51 2017 Monday ,20 February

Ways to acquire presentation skills

GMT 19:16 2017 Friday ,17 February

Aziz House ready to host the tourists

GMT 13:12 2015 Saturday ,09 May

Sheikh Sultan opens Sharjah Centre

GMT 12:39 2017 Monday ,20 February

newest smartphone another winner for Huawei

GMT 16:08 2017 Wednesday ,15 February

Shawsh reveals her collection "Jewelry of dreams"
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday