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European Union throws security blanket over euro
Malaysia Sun
Monday 10th May, 2010
Investors around the world were relieved Monday when they woke up to news of a $1 trillion rescue package for beleagured European Union member nations.
European Union finance ministers have finalised a $1 trillion safety net for financially struggling members, in an attempt to contain a growing crisis of confidence.
Working through Sunday night into the early hours of Monday morning, ministers constructed a plan in preparation for an announcement prior to the opening of markets in Asia.
The plan provides for $75 billion in loans from the European Commission, the EU's executive arm, to countries in difficulty; almost $570 billion more backing through bilateral loans and $315 billion from the International Monetary Fund. It follows a worldwide stock market plunge late last week on fears that the Greek financial crisis might spread to other stressed EU economies, including Portugal and Spain.
"This has clearly been a systemic challenge for financial stability in the euro area,"EU Monetary Affairs Commissioner Olli Rehn told a hastily convened press conference early Monday "It is not an attack on one or another individual member state, it is a threat to financial stability of the euro area and the European Union."
Global stock markets rallied on news of the package on Monday with major bourses around the world notching up huge gains. The euro responded with major gains early, and even by the close in New York Monday the unit was up more than two cents to 1.2784.
Greece's deficit and government debt has sparked international concern that it may default on its loan payments. Financial ratings agencies have downgraded its ratings, along with those of Portugal and Spain. But other European economies are also sending troubling signals, notably Britain which is projected to have a 12% deficit this year.
Critics fault the EU for its slow and divided response in dealing with the Greek crisis, notably from the German government which was reluctant to lend Athens money without it first agreeing to further austerity measures.
Berlin ultimately signed onto a massive rescue package for Athens, cobbled by the EU and the IMF. But the idea of shoring up Greece is deeply unpopular in Germany, and Chancellor Angela Merkel's party lost a regional election on Sunday.
Malaysia Sun
Monday 10th May, 2010
Investors around the world were relieved Monday when they woke up to news of a $1 trillion rescue package for beleagured European Union member nations.
European Union finance ministers have finalised a $1 trillion safety net for financially struggling members, in an attempt to contain a growing crisis of confidence.
Working through Sunday night into the early hours of Monday morning, ministers constructed a plan in preparation for an announcement prior to the opening of markets in Asia.
The plan provides for $75 billion in loans from the European Commission, the EU's executive arm, to countries in difficulty; almost $570 billion more backing through bilateral loans and $315 billion from the International Monetary Fund. It follows a worldwide stock market plunge late last week on fears that the Greek financial crisis might spread to other stressed EU economies, including Portugal and Spain.
"This has clearly been a systemic challenge for financial stability in the euro area,"EU Monetary Affairs Commissioner Olli Rehn told a hastily convened press conference early Monday "It is not an attack on one or another individual member state, it is a threat to financial stability of the euro area and the European Union."
Global stock markets rallied on news of the package on Monday with major bourses around the world notching up huge gains. The euro responded with major gains early, and even by the close in New York Monday the unit was up more than two cents to 1.2784.
Greece's deficit and government debt has sparked international concern that it may default on its loan payments. Financial ratings agencies have downgraded its ratings, along with those of Portugal and Spain. But other European economies are also sending troubling signals, notably Britain which is projected to have a 12% deficit this year.
Critics fault the EU for its slow and divided response in dealing with the Greek crisis, notably from the German government which was reluctant to lend Athens money without it first agreeing to further austerity measures.
Berlin ultimately signed onto a massive rescue package for Athens, cobbled by the EU and the IMF. But the idea of shoring up Greece is deeply unpopular in Germany, and Chancellor Angela Merkel's party lost a regional election on Sunday.
