BRUSSELS – New European Central Bank powers to oversee eurozone banks will help restore confidence in the sector and revive interbank lending, its president, Mario Draghi, said on Monday.
European ministers clinched a deal last week to give the ECB powers to supervise the currency bloc’s banks from March 2014, taking the first step in a new phase of integration to help underpin the euro.
The endless Italian bailout story that keeps on giving, has just given some more. It turns out Italy's insolvent Banca dei Monte Paschi, which has been in the headlines for the past month due to its role as political leverage against the frontrunning Bersani bloc, and which has been bailed out openly so many times in the past 4 years we have lost track, and whose cesspool of a balance sheet disclose one after another previously secret derivative deal on an almost daily basis, can now add a previously unannounced bailout by the Bank of Italy to its list of recent historical escapades.
Editor’s Note: The following post comes to us from Eilis Ferran, Professor of Company and Securities Law, and Valia SG Babis, both at University of Cambridge.
Euro Area banks need credible financial backstops.
With the ECB's rate cut decision already wreaking havoc on logic and common sense everywhere, pushing the EUR much higher, and the USd and JPY lower, one can't wait just what non-standard measures Mario Draghi will come up with next to send the EUR to record highs, providing a boon to German IMports. Wait, but the GDP calculation said that net imports are... oh, nevermind.
Today the ECB left interest rates unchanged and hinted at future bond purchases but also warned "Governments must stand ready to activate the EFSF/ESM".
The Financial Times has details in Draghi prepares for fresh bond buying
BERLIN (Reuters) - German Chancellor Angela Merkel warned on Monday against rushing to create a new pan-European bank supervisor under the roof of the ECB, saying it was more important to put a credible watchdog in place than to meet Europe's self-imposed January deadline. Speaking at her traditional summer news conference in Berlin, delayed this year to allow the Constitutional Court to rule first on Europe's new rescue fund, Merkel also voiced support for European Central Bank (ECB) President Mario Draghi's decision to buy the bonds of stricken euro states. ...