The Draghi stratagem
ECB
“ECB refinancing auctions means help for Spanish, Italian smaller banks”
The Governing Council of the European Central Bank (ECB) decided last week on additional enhanced credit support measures to support bank lending and liquidity in the euro area. In particular, the Governing Council proposed to conduct two longer-term refinancing operations (LTROs) with a maturity of 36 months and the option of early repayment after one year. Among other measures, the central bank also accorded to reduce the reserve ratio, which is…
Market reaction to S&P’s EZ and EFSF downgrade warning better than expected
By Julia Pastor, in Madrid | Ratings agency S&P’s threat of downgrading the euro zone and the EFSF has fallen like a ton of bricks among leaders and European institutions. Santander analysts believe, however, that it has also been accepted with a certain degree of realism: “The German Minister of finance, Schäuble, commented that the warning is the best incentive to promote a solution to the crisis and regain the confidence…
Light treaties, heavy orthodoxies
Europe must suffer
Morgan Stanley: “French, Italian banks lead ECB lending demand”
The Spanish investment website Consenso del Mercado published on Friday this revealing note and table from Morgan Stanley about the ECB loans. “The deterioration of the euro zone crisis makes very difficult the necessary deleveraging process, which is estimated at €1.5 to 2.5tr during the next 18-24 months. The ECB lendings have reached two-year record highs with French and Italian banks being the ones that increased their demand the most. “Limited…
JP Morgan: “France-Germany spread is the highest of all times”
On Thursday Spain had to pay 6.975% interest to borrow money at 10 years: a spread of 480bp against the German rate. It is the highest rate Spain has had to pay since it became part of the euro zone. However, analysts at JP Morgan remarked that France’s differential compared to Germany’s “is not only the highest since the euro exists, but the highest of all time.” On the other…
“Germany must allow the ECB to inject €3tr”, says Morgan Stanley
By Julia Pastor, in Madrid | The shared understanding between Berlin and Paris, that is, between chancellor Angela Merkel and president Nicolas Sarkozy, has suffered a breakdown for the first time since the euro crisis began. The reason is their different views on what role the European Central Bank (ECB) should be playing for the euro crisis to find a way out. While France defends giving the European Financial Stability…
What a difference a 0.25 makes
The European Central Bank must act as a last resort lender, or else
