The chief concrete change that came out of the summit is the one I reported would most likely happen (over a month ago). The ESM can now directly recapitalize banks. This “surprise” good news announcement buoyed markets yesterday.
The BBC identifies the challenges that lie ahead:
“The agreement appears to be a concession by Germany, which has insisted on strict limits for Eurozone lending. The Maastricht Treaty which launched the euro does not allow governments to be bailed out directly with EU taxpayers' money - yet that is where the rescue funds' money comes from.
…..
Some elements of a fiscal union are so fundamental that they would require treaty changes and at the very least referendums in some countries. All of that could easily take 10 years.”
We will see what German opposition (previously in favour of faster integration) thinks of this now that reality is getting closer. The Eurozone does not have 10 years to get this right. They might have 1 year if they can show evidence of progress.
My scepticism that there will be a failure to rescue the Euro remains unchanged. I think this current honeymoon lasts unlit the quarterly GDP numbers start rolling in.
The BBC identifies the challenges that lie ahead:
“The agreement appears to be a concession by Germany, which has insisted on strict limits for Eurozone lending. The Maastricht Treaty which launched the euro does not allow governments to be bailed out directly with EU taxpayers' money - yet that is where the rescue funds' money comes from.
…..
Some elements of a fiscal union are so fundamental that they would require treaty changes and at the very least referendums in some countries. All of that could easily take 10 years.”
We will see what German opposition (previously in favour of faster integration) thinks of this now that reality is getting closer. The Eurozone does not have 10 years to get this right. They might have 1 year if they can show evidence of progress.
My scepticism that there will be a failure to rescue the Euro remains unchanged. I think this current honeymoon lasts unlit the quarterly GDP numbers start rolling in.
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