Things may get even worse before they get much better in the European financial crisis, Reuters reports. The European Central Bank is pressuring for a joint guarantee on bank deposits across the euro zone, amid worries that bank runs will spread like wildfire as investors head for the hills. Top economic official of the European Commission Olli Rehn warned that without additional financial discipline, Europe will descend into a financial chasm.
Spain, Greece and fear of bank runs
The euro currency has deflated to a two-year low against the United States dollar due to concerns that Greece may not survive and Spain's banking system could collapse. Austrian and French bonds have 10-year yields at their low since the introduction of the euro, but European speculators are putting money in nonetheless.
Because of an enormous real estate crash in May, the fourth-largest lender in Spanish banking, Bankia, was nationalized. Spanish banks have lost as much as $82 billion recently. The banks have moved money as quickly as possible in March at a quicker rate than has been recorded since transactions started being recorded in 1990, according to the AP.
Bailout plan denied
IMF Managing Director Christine Lagarde denied reports that the International Monetary Fund is preparing for a Spanish bank bailout to keep Europe's economy from sinking further into the mire.
"There is no such plan. We have not received any request to that effect and we are not doing any work in relation to any financial support," said Lagarde.
A referendum in Ireland would make it easier for the European Union to offer aid to Ireland voters, according to the New York Times. There is also an election in Greece on June 17 that will go a long ways towards to euro zone for the nation. Right now, the bank bailout favoring New Democracy party is beating the SYRIZA leftists, which is a good thing for people who want bank bailouts.
Some clarity needed
The ECB will not write economic policy for the entire euro zone; European leaders have to determine where the nations stand easily, according to European Central Bank President Mario Draghi.
"We will avoid bank runs from solvent banks. Depositors' money will be protected if we build this European guaranteed deposit fund. This will assure that depositors will be protected," said Draghi.
Germany is well-known as a paymaster of the European Union and does not like the idea of a joint deposit guarantee for depositors that the ECB is pushing for. It is something German Chancellor Merkel is not sure about. Germany has not been willing to put taxpayer dollars to the union in the past.
"There are integration steps which will require treaty changes. We are not at that stage today but nevertheless there are no taboos," she said at a news conference.
Stemming the tide
It is not a good idea to stay cautious at this time, according to Draghi, although financiers are really worried due to the European economic crisis.
"I urge all governments to keep this in mind, because it is better to err by too much in the very beginning rather than by too little," he said, citing the recent failures of Spain's Bankia and the French-Belgian bank Dexia.
Spain, Greece and fear of bank runs
The euro currency has deflated to a two-year low against the United States dollar due to concerns that Greece may not survive and Spain's banking system could collapse. Austrian and French bonds have 10-year yields at their low since the introduction of the euro, but European speculators are putting money in nonetheless.
Because of an enormous real estate crash in May, the fourth-largest lender in Spanish banking, Bankia, was nationalized. Spanish banks have lost as much as $82 billion recently. The banks have moved money as quickly as possible in March at a quicker rate than has been recorded since transactions started being recorded in 1990, according to the AP.
Bailout plan denied
IMF Managing Director Christine Lagarde denied reports that the International Monetary Fund is preparing for a Spanish bank bailout to keep Europe's economy from sinking further into the mire.
"There is no such plan. We have not received any request to that effect and we are not doing any work in relation to any financial support," said Lagarde.
A referendum in Ireland would make it easier for the European Union to offer aid to Ireland voters, according to the New York Times. There is also an election in Greece on June 17 that will go a long ways towards to euro zone for the nation. Right now, the bank bailout favoring New Democracy party is beating the SYRIZA leftists, which is a good thing for people who want bank bailouts.
Some clarity needed
The ECB will not write economic policy for the entire euro zone; European leaders have to determine where the nations stand easily, according to European Central Bank President Mario Draghi.
"We will avoid bank runs from solvent banks. Depositors' money will be protected if we build this European guaranteed deposit fund. This will assure that depositors will be protected," said Draghi.
Germany is well-known as a paymaster of the European Union and does not like the idea of a joint deposit guarantee for depositors that the ECB is pushing for. It is something German Chancellor Merkel is not sure about. Germany has not been willing to put taxpayer dollars to the union in the past.
"There are integration steps which will require treaty changes. We are not at that stage today but nevertheless there are no taboos," she said at a news conference.
Stemming the tide
It is not a good idea to stay cautious at this time, according to Draghi, although financiers are really worried due to the European economic crisis.
"I urge all governments to keep this in mind, because it is better to err by too much in the very beginning rather than by too little," he said, citing the recent failures of Spain's Bankia and the French-Belgian bank Dexia.
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