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Barroso Promises Proper Bank Health Checks

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But he has also reiterated, which may seem naive to some of the EU's creditors, that no other eurozone member would be permitted to reduce the value of what they owe.

There would be greater "firepower" for the EU's bailout fund, the European Financial Stability Facility (EFSF), than its planned 440bn euros - although it is not clear how this firepower would be acquired.

And there should be a strengthening of banks - based on tests of how much the banks would lose if a number of eurozone member states with excessive debts are unable to repay all they owe.

Mr Barroso explained why he now accepts the time for half-measures has passed.

He said: "For confidence to return, we need to fix the sovereign debt problem, which can only be done through a coherent package. And we must therefore urgently strengthen the banks, because in fact, those two issues - the sovereign contagion and the banks - are now, whether we like it or not, linked".

Bold enough?

Probably the most important statement he made was that the amount of capital that will have to be injected into banks will be determined by potential losses banks would incur on their loans to governments, irrespective of whether the loans are held in so-called trading books or banking books.

This may seem technical. But it would correct one of the glaring flaws of previous European health checks or stress tests on banks.

That said, it is impossible to gauge whether the eventual solution will be bold enough to reassure banks' creditors and investors - because Mr Barroso refused to say what precise level of potential loss on loans to the likes of Greece, Portugal, the Republic of Ireland, Italy and Spain the banks should protect themselves against.

It is also unclear how much the "stressed" minimum ratio of capital to assets will be increased, to reassure lenders to banks that the banks are strong enough to weather almost any storm.

Great we are going to fix the debt crisis by a coherent package more debt?

Good to see that the EU are going to have some more stress tests to prove how reliable the banks are and hopefully this time they'll fool the market.

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Barroso Promises Proper Bank Health Checks

The most dangerous person in the EU along with that useless **** Baroness Ashton. :rolleyes:

Another Barraso dictat? Who the hell does he think he is?

He is the ex leader of the Portuguese Maoist Party which folded when the Chinese Communists stopped funding them. :D

And now an arousing rendition of Jerusalem. <_<

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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