Non-performing loans: banks need to mitigate the risk of potential losses

This article is brought to you in association with the European Parliament. Parliament has adopted, on Thursday, new EU rules for standard minimum coverage of bad loans. Measures to mitigate the risk of possible, future, non-performing loans (NPLs) accumulating due to the recessions brought about by the 2008 financial crisis were approved by the Parliament, with […]

IMF: All you want to know about Argentina

This article is brought to you in association with the International Monetary Fund Written by IMF staff Frequently asked questions about Argentina, June 7, 2018 How much money will be disbursed to Argentina to support the new economic plan? Argentina and IMF staff have reached an agreement on an economic plan that can be supported by […]

Who cares more about taxpayers? The US by being harsh on major banks or the EU still caressing them?

The world economy remains more or less motionless or even recedes six years after the financial meltdown, because the banking industry has not yet decided what’s best for its interests. Continue leveraging itself (borrowing) on central bank liquidity in a stagnating environment, or start deleveraging and send the world to another deep recession, if not […]

ECB money bonanza not enough to revive euro area, Germany longs to rule with stagnation

During the days ahead of last Thursday’s 3 December meeting of the European Central Bank’s Governing Council, financial markets and market oriented media had been pressing for a stronger monetary accommodation (easing), than what President Mario Draghi finally announced in the afternoon of that day. As a result, the euro appreciated markedly with the dollar […]

Big world banks to pay $ 4.95bn for cheating customers; Is it a punishment or a gentle caress?

Last week five of the world largest banks, JPMorgan, Barclays, Citigroup, Royal Bank of Scotland and Union de Banques Suisses were fined by the American magistrates a total of $ 4.7 billion for rigging interest rate benchmarks. The banks had been setting those standards by themselves for five years after 2007. In another case the […]

The EU Commission by serving the banks offers poor support to European mainstream political parties

The 2008-2012 financial aka banking crisis and its devastating repercussions on the European Union, with deep recession and skyrocketing unemployment, are the main reasons why the EU political and economic establishment shivers ahead of the 22-25 May elections fearing a possible disastrous result. Eurosceptic extremists, nationalists and harlequins may occupy an increased part of the […]

Is Eurozone preparing to abandon austerity and stagnation?

Two unrelated at first reading, but in reality very closely connected developments, materialised this week. On the one side it’s the new fall of industrial producer prices in February 2014 (deflation), while on the other, Germany surprised everybody by adopting, for the first time in its economic history, a compulsory minimum wage, expected to be […]

Draghi indirectly accuses Germany of using double standards in financial issues

Last Monday, Mario Draghi, the President of the European Central Bank appeared in his last hearing in the Committee on Economic and Monetary Affairs of the European Parliament, before the present legislature dissolves in view of the May elections. In his introductory speech he seized the opportunity to underline a few things that some European […]

Facilitating the access to finance and risk capital for SMEs and midcaps

As they say better late than never. The EU Commission decided to relax the rules regulating the granting of state aid to SMEs and midcaps. This initiative relates to easing the terms of high risk equity financing of companies with perceived high-growth potential during their early growth stages. In normal financial circumstances high risk capital […]

Predicting two more years of economic stagnation

Yesterday, as expected, the European Central Bank kept its basic interest rate unchanged at 0.25%. As usually, the decision was taken in the meeting of the bank’s Governing Council, the first of 2014. At this almost zero interest rate cost commercial banks get ample liquidity from the ECB and then lend this money to the […]

The financial sector cripples Eurozone growth prospects

According to a European Central Bank Press release published on 3 January 2014, Eurozone banks further reduced their overall outstanding balance of loans to the private sector during November 2013. Given that industrial multinationals and big services firms do not rely on bank loans for their financing, it’s mainly the SMEs that have been deprived […]

SMEs and micro firms sinking together with south Eurozone

Only 0.2% of the non-financial companies are large (more than 249 employees), the rest are either micro firms (up to 10 employees, 92.5%) or small and medium enterprises (10 to 249 employees, 7.3%). Eurostat, the statistical service of the European Union, regularly publishes data on enterprises broken down by size classes, which provide information on […]

ECB offers cheaper money despite reactions from Germany

Yesterday, the European Central Bank, in a swift move, reduced its basic interest rate to 0.25% from 0.5%. The decision was taken by the Governing Council of the bank, in its regular meeting which takes place on the first Thursday of every month. This decision has reportedly taken the capital markets by surprise, but this […]

The Ecofin deceives the SMEs with the EIB €10bn capital increase

Shakespeare’s comedy play title “Much Ado About Nothing” best describes the 28 Ecofin ministers for Finance discussion on the EU Commission and European Investment Bank initiative, wishfully aimed at facilitating the access to finance for SMEs. The programme extends over the next few years and foresees an increase of EIB’s capital by €10 billion. This […]

IMF to teach Germany a Greek lesson

International Monetary Fund managing director Christine Lagarde, in a Press conference held yesterday in Washington, ahead of the 2013 annual meetings of the World Bank and IMF set to take place this weekend, chose to directly confront Germany over the Greek Gordian knot. She repeated three times that the Greece’s Eurozone partners have reiterated on […]

OECD: Mind the financial gap that lies ahead

A rather disappointing picture of the world economy drew OECD Deputy Chief Economist Jorgen Elmeskov last week, when he said that “The gradual pick-up in momentum in the advanced economies is encouraging but a sustainable recovery is not yet firmly established. Major risks remain”. If it was not for China’s predicted growth during the last […]

Draghi reserved about Eurozone’s growth prospects

Yesterday, Mario Draghi, President of the European Central Bank, during the Press conference following the meeting of the Governing Council, in answering a journalist’s question appeared quite reserved about Eurozone’s growth prospects. Despite the fact that ECB’s staff projections for 2013 have been revised upwards, estimates for 2014 growth potential are now downgraded. Not to […]

ECB is about to lend trillions to banks

The institutionalisation of the Single Resolution Mechanism to deal with failing banks, a new tool to complement ECB’s Single Supervisory Mechanism (SSM), two cornerstones in building the European Banking Union, cannot be accomplished correctly, if member states were allowed directly or indirectly to support with public money their failing or about to fail banks, in […]

Why the ECB suddenly decided to flood banks with money?

It was not a coincidence that the Governing Council of the European Central Bank  suddenly decided unanimously last week to further relax its monetary policy promising more and cheaper loans to all banks, exactly at a time when the US central bank, the Fed, is about to start calling back the trillions of dollars it […]

Inflation and interest rates indicate urgent need for action

Inflation indices are a measure not only of the rate of change of consumer prices. In organised economies like Eurozone inflation is a good indirect measurement of economic activities. A bit more inflation above the benchmark of 2% is a good indication that the economy is growing, the opposite for measurements below that level. Inflation […]