How To Guides
- Childbirth & Education
- Legal Formalities
- Pensions & Benefits
- Property & Accommodation
Did you know...?
... Telefonica are NOT the only service provider of Telephone Lines, Internet Access or Mobile Phones?
Tumbit recommends Telitec Communications. Find out how Telitec Communications can help you here!
- Airports and Airlines Spain
- Paramount Theme Park Murcia Spain
- Corvera International Airport Murcia Spain
- Daily brief -Wednesday 28 September 2016
- When Expat Eyes Are Smiling
- Meet Wincham at The Homes, Gardens & Lifestyle Show, Calpe
- QROPS 2014
- Spain Increases IHT in Valencia & Murcia
- Removals to Spain v Exports from Spain
- The Charm of Seville
- Gibraltar Relations
- Retiro Park : Madrid
- Wincham announce opening of Marbella office
- Community Insurance in Spain
- Calendar Girls
- Considerations when Insuring your Boat in Spain
- QROPS – HMRC Introduces changes that create havoc in the market place
- QROPS – All Change From April 2012
ECB policymakers urge thrift to contain crisis
Governments must knuckle down to even tougher budget reforms to ward off a further escalation of the debt crisis that has the euro zone in its grip, European Central Bank policymakers said on Wednesday.
Executive Board member Juergen Stark said current trends in fiscal policy were "simply not sustainable."
"The onus is now on governments to ensure that the crisis that initially affected the financial sector, and subsequently the real economy, does not lead to a full-blown sovereign debt crisis" he said in a speech in Berlin.
"Averting it will require very ambitious and credible fiscal consolidation efforts. In fact, substantially stronger consolidation efforts than those conceived so far."
Yields on Greek and Portuguese debt soared after ratings agency S&P cut Greek debt to junk status and stoked worries about spillover by cutting Portugal's rating two notches to A-.
The deepening budget woes have sparked speculation that the ECB -- which has started to phase out its crisis lending measures - might be forced to provide extra support.
Stark dismissed the prospect of buying Greek bonds, and other policymakers gave no indication extra measures were in train, but there are signs that credit is not flowing as freely as the ECB would like.
Germany's Axel Weber said policymakers would make sure the euro zone as a whole was not damaged by the Greek situation, although he too noted the risk of contagion.
"The motive for preparing support measures is to secure financial stability and not help for Greece, which got itself into this difficult situation" Weber said in a speech at a meeting of German savings banks.
"European monetary union is not endangered by Greece seeking aid, and we will make sure it stays this way."
Speaking in Luxembourg, fellow policymaker Yves Mersch said "utmost discipline" was needed to deal with the Greek crisis.
"Everyone has to live up to their responsibilities to improve the situation and the ECB will do so" he said.
ECB President Jean-Claude Trichet and IMF chief Dominique Strauss-Kahn will brief German political leaders on the latest plans to help Greece and plan a news conference at around 1:30 p.m. British time.
CREDIT FLOWS SQUEEZED?
Policymakers said rates were appropriate at the current record low of 1 percent, although Weber repeated his assessment from last week that inflation risks are on the upside - a break from the consensus view that risks are balanced.
Economists see no change in rates until 2011.
Still, there are some signs that money market conditions are not as favourable as they were, and credit is not flowing freely to the private sector.
Banks borrowed less than a third of the 15 billion euros (13 billion pounds) the ECB had offered over three months at its first competitive lending operation since the crisis intensified, although a willingness to pay a relatively high 1.5 percent - more than double the market rate - raised some eyebrows.
The ECB's latest bank lending survey showed banks continued to tighten credit standards for loans to firms and households in the first quarter, and expected to keep on the same path.
But loan demand fell, reversing a recent trend of increases in the case of home loans, and 40 percent of banks said they expected the crisis to have an impact on their capital or lending.
"Evidence from the BLS seems to point at a pause in the process of recovery of credit cycle which had been signalled during the past quarters" UniCredit economist Loredana Federico said.
Mersch said the need for further bank writedowns was likely to continue to fall, but external shocks could change this.
He said banks were generally less dependent on central bank funding for liquidity needs, but added this does not apply equally to all banks.
Weber said a widescale credit crunch in Germany, the euro zone's biggest economy, was unlikely but could not be ruled out altogether.
Latest News & Stories
- Six Votes Rajoy Needs in Spain May Turn Up in the Basque Country
- Catalonia Developing ID Cards For Residents in Event of Separation From Spain
- Spain's regional rift makes third election more likely