| Author (Person) | Jenkins, Patrick |
|---|---|
| Series Title | Financial Times |
| Series Details | 6.10.11 |
| Publication Date | 06/10/2011 |
| Content Type | News |
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Article reports that the European Banking Authority, the EU's banking regulator, started in October 2011 to re-examine the strength of the region’s banks, modelling a big writedown of all peripheral eurozone sovereign debt. The exercise could potentially identify capital shortfalls across the banking system of as much as €200bn ($266bn). The EBA was said to be also closely involved in talks with European officials and governments over mechanisms that could be used to forcibly recapitalise banks, enabling them to cope with sovereign defaults. The move was a tacit admission that the EBAs two previous rounds of bank stress tests were not sufficiently robust. Separately, the IMF launched and discussed its Regional Economic Survey for Europe on the 5 October 2011. Following a strong showing in early 2011, the economies across Europe now face the prospect of a pronounced slowdown, as global growth has softened, risk aversion has risen, and strains in Europe’s sovereign debt and financial markets have deepened, according to the Regional Economic Outlook: Europe. Downside risks are significant, and a further deepening of the euro area crisis would affect not only advanced Europe, but also emerging Europe, given its tight economic and financial ties. The policy stance in advanced Europe will need to be adapted to reflect the weakening and tense outlook, financial systems strengthened further, and a consistent, cohesive, and cooperative approach to monetary union adopted by all euro area stakeholders. The cross-country experience in the past decade in Europe shows the difference that good policies can make in boosting growth, with some European countries having grown rapidly while others have stagnated. Escaping low-growth traps, through broad-based reforms that address macroeconomic imbalances and country-specific structural rigidities, is possible. |
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| Subject Categories | Business and Industry |
| Countries / Regions | Europe |
