Euro-Zone News and Analysis
Press summary: Merkel ready to drop her opposition to expanding eurozone bailout funds
From the Open Europe press summary:
Süddeutsche: Merkel ready to drop her opposition to expanding eurozone bailout funds
Bundesbank head expresses concerns over ECB’s lax collateral requirements for bank lending
Süddeutsche reports that Chancellor Merkel is ready to drop her long-standing opposition to expanding the borrowing ceiling on the eurozone’s bailout funds from €500bn to €750bn, with a final decision expected at the end of March. This would be achieved by running the temporary bailout fund, the EFSF, in parallel with the new permanent fund, the ESM over the next year. Overall, Germany’s share of the guarantee would increase from €211bn to €280bn. The paper cites government sources as saying that “In the long run, we cannot resist such pressure [from the rest of the world]”. However, FTD reports that Merkel will still face opposition from her CSU and FDP coalition partners.
FAZ reports in a sign of growing unrest at the Bundesbank, its head Jens Weidmann has written to ECB President Mario Draghi, warning of “growing risks” within the euro system following the ECB’s recent relaxation of the requirements for collateral in monetary policy operations, allowing it to lend billions of euros to Europe’s weakest banks via its so-called Long Term Refinancing Operation (LTRO).
Greek PM Lucas Papademos has dismissed a suggestion by Jean-Claude Juncker, the head of the Eurogroup, for an EU-appointed ‘Reconstruction’ Commissioner for Greece, reports ARD. Meanwhile, following a tense debate, the Finnish Parliament yesterday approved the second Greek bailout package by a margin of 111 to 72.
The Irish Times reports that in a report, controversially circulated yesterday in the German parliament, the EU Commission has warned that further deterioration in the global macroeconomic situation this year could necessitate additional “fiscal tightening” in Ireland, and see next year’s planned return to financial markets “evaporate”.
El País reports that protests against education cuts turned violent in Barcelona yesterday, as twelve people were arrested after students clashed with the police. Meanwhile, Cinco Días reports that Spain’s trade unions are considering calling another general strike against the Spanish government’s reform of the labour market on 29 March. Separately, Jornal de Negócios reports that Portugal’s borrowing costs are continuing to rise, despite the ECB resuming its purchase of Portuguese bonds yesterday.
Süddeutsche Welt FTD Handelsblatt FT FAZ Irish Times Telegraph Telegraph 2 European Voice BBC Irish Times 2 Telegraph EUobserver FT 2 CityAM FT 3 Independent IHT Le Figaro WSJ WSJ 2 IHT Le Figaro Kathimerini Kathimerini 2 ARD CityAM 2 Süddeutsche 2 CityAM 3 FT 5 Jornal de Negócios IHT El País El Mundo BBC Cinco Días El País El País 2 Expansión Expansión 2 EUobserver FT 4 Les Echos Monde La Tribune ARD
Bini-Smaghi: ECB should be given greater supervisory power over eurozone banking system
Writing in the FT, former ECB Executive Board member Lorenzo Bini-Smaghi says “The ECB has helped to reduce systemic risk and avoided a credit crunch. To minimise the inefficiencies and perverse incentives that may result from the increase in its balance sheet, and to reduce counter-party risk, the ECB should be given a greater role in co-ordinating and overseeing supervision of the eurozone banking system. The euro area needs a supervisory and regulatory compact, as much as – if not more than – a fiscal compact.”
Writing in Bild, the former President of Germany’s Constitutional Court between 2002 and 2010, Hans-Jürgen Papier, argues that "the EU should become more humble", adding that “it is not necessary to reinvent the EU. Rather it simply needs to over-come its self-centeredness and focus more on two core elements; the principles of subsidiarity and vibrant democracy. Europe should act only if and when member states cannot adequately fulfill the task themselves”.
FT: Bini Smaghi FT Lex FT: Verhofstadt FT Editorial Le Monde BBC: Flanders Times: King Independent: McRae IHT: Fitoussi El País: Otero Iglesias WSJ: Review & Outlook WSJ: Heard on the street Kathimerini: Xydakis Bild: Papier
Handelsblatt reports that Van Rompuy will also be elected as Eurogroup chief, succeeding Luxembourg PM Jean-Claude Juncker. FAZ comments that "Angela Merkel is now glad that Herman Van Rompuy has turned into a counterweight to José Manuel Barroso".
Welt: Fiscal Treaty to lose its teeth
Die Welt reports that according to a draft agreement concerning the implementation of the fiscal treaty, the Commission will not have the right of taking signatories that are in breach of its provisions on budgetary discipline to the European Court of Justice, but instead this obligation will fall to the three member states holding the EU’s rotating presidency, providing they themselves are signatories to the pact and not in breech of it.
Separately, the deputy leader of Ireland’s main opposition party Fianna Fáil, Éamon Ó Cuív, resigned yesterday after coming out against party leader Micheál Martin’s decision to campaign for a ‘Yes’ vote in the Irish referendum on the ‘fiscal treaty’.
Welt FT FT: Gardner EUobserver BBC: Hewitt Irish Times: Barrett Irish Times Irish Independent Irish Times Irish Times Irish Independent: Devlin Irish Times: Scally