euro zone

Introduction The European Stability Mechanism (ESM) backstops the euro. Its nominal size is €705 billion but its lending capacity is lower at €500 billion, and the main condition attached to…

Ratings Agencies take notice of deteriorating finances Debt ratings agencies may not have the power they used to possess before the 2008 global financial crisis, but they still carry influence.…

The European Union is about to bail out Cyprus but no details on how it could be done are released yet. Joerg Asmussen, ECB board member, announced that “the troika of European Union, International Monetary Fund and the European Central Bank would send a mission of experts to Cyprus on Tuesday for a technical analysis of the country’s financing needs and to get a better understanding of the new Cypriot government.” Owing to the importance of the event for the Euro zone, it is worth reminding what Enrico Colombatto, IREF scientific director, wrote on Cyprus’ bailout.

The disaster everyone feared for several months finally occurred yesterday – Greece’s credit rating was reduced to junk status and financial markets slumped. Moreover, Portugal’s debt has also been downgraded, Spanish stocks plunged more than four percentage points and in Italy it was difficult to sell government bonds.