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EU Preparations the Establishment Permanent Crisis Solution Mechanism
- By Christina Xia
- Published 01/31/2012
- Business Management
- Unrated
Christina Xia
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EU finance ministers, local time on November 28 approved the Irish Aid Programme, the European Union with the International Monetary Fund and the United Kingdom, Sweden, Denmark, Ireland, provides size of the joint to 850 million euros of financial assistance. Under the plan, the rescue loan 35 billion euros will be used to help the Irish banking system, 500 billion euros for fiscal consolidation in the country. However, the assistance loan interest rates has not been determined. EU says will be at 6% interest rates may fluctuate.
To ease market concerns about the stability of the euro area, EU Member States on the establishment of a permanent finance ministers also agreed the crisis resolution mechanisms, new mechanisms will start in mid-2013.
Outstanding loan interest rate
28 Irish Prime Minister Brian Cowen said the Irish government accepted in principle the above assistance programs. Cowen said that 85 billion euros in aid has, the Irish national pension reserve fund from other domestic financial resources raised 17.5 billion euros, the amount of external assistance received will be reduced to 675 million euros. This amount of 67.5 billion euros of external assistance consists of three parts: 22.5 billion euros will come from EU member governments to establish emergency financial assistance to the project - the European financial stability mechanism, 22.5 billion euros from the IMF, another 22.5 billion euros from the year 5 financial stability in Europe on the establishment of funds in the Fund and the United Kingdom, Sweden, Denmark's bilateral loans.
However, the assistance loan interest rates has not been determined. The implementation of the EU Economic and Monetary Affairs Committee, said Rehn, due to different funding channels, to provide relief for the Irish loan period from 3 to 7 years a half years, the interest rate will be slightly different, the average lending rate is about 6%, may the final decision in the week. Irish media, may be as high as 6.7% interest rate, but Cowen said the average interest rate of 5.8%. French Finance Minister Christine Lagarde said that the final loan repayment assistance for 10 years, Ireland will begin paying after 3 years, the average lending interest rates will be "slightly below" 6% interest rate range is between 5.7 to 6.5% .
Yu Jian permanent settlement mechanism
28 EU finance ministers to respond to future EU on establishing a permanent mechanism for debt crisis agreement, the
new mechanism will be launched in mid-2013.
Under the mechanism, if not an EU member states that sufficient funds from the debt market, the Irish will be similar to the emergency assistance loan. However, the countries have not yet reached the scale of funding in respect of the same mechanism.
Rehn said that the mechanism may be reference to the scale of 4,400 million euros in European financial stability fund model.
In addition, the German Chancellor Angela Merkel, French President Nicolas Sarkozy, President of the Council of Europe permanent and the European Central Bank President Jean-Claude Trichet Rompuy joint proposal to require the creditors of the EU commitment to private sector debt problems of the future EU Member States part of the loss.
Euro group president, Juncker of Luxembourg after the meeting, said at a news conference, according to the agreement reached by euro-zone finance ministers, the euro zone next to establish a permanent mechanism for crisis response into a debt crisis in the Member States to provide relief when with bonds and other debt of the country's private investors need to take some losses, such as extending the repayment period or reduce the interest payments.
However, Juncker stressed that the private investors to foot the bill for the practice of sovereign debt crisis is only expected in mid-2013 for the establishment of the euro zone after the permanent crisis response mechanism, when the euro-zone government bonds issued by the State must include this clause, whether True investors will bear the loss of case management, Greece and Ireland is currently possible in other euro countries the debt crisis, the establishment of mechanisms for the temporary relief does not apply to this practice.
Increased credit risk in Germany
The sovereignty of other European countries compared with the price of credit default swaps, the recent EU member states "aid big" CDS Germany as one of the largest price increases in France, the Netherlands and other EU member states CDS core prices rose sharply . Last week, the state and includes Denmark, Norway and Iceland, non-euro area member states, including CDS spreads widened to the highest since the euro was launched.
Market is expected to obtain aid money after following the Ireland, Portugal, Spain and even Italy are likely to join the ranks of application assistance. University of Frankfurt professor William said: "If Germany continues to provide loan funds to the EU Member States, the country will likely bear the risk of bankruptcy." Analysts pointed out the debt if there is any negative news in Germany, the euro will face a "drowned the disaster. "
To ease market concerns about the stability of the euro area, EU Member States on the establishment of a permanent finance ministers also agreed the crisis resolution mechanisms, new mechanisms will start in mid-2013.
Outstanding loan interest rate
28 Irish Prime Minister Brian Cowen said the Irish government accepted in principle the above assistance programs. Cowen said that 85 billion euros in aid has, the Irish national pension reserve fund from other domestic financial resources raised 17.5 billion euros, the amount of external assistance received will be reduced to 675 million euros. This amount of 67.5 billion euros of external assistance consists of three parts: 22.5 billion euros will come from EU member governments to establish emergency financial assistance to the project - the European financial stability mechanism, 22.5 billion euros from the IMF, another 22.5 billion euros from the year 5 financial stability in Europe on the establishment of funds in the Fund and the United Kingdom, Sweden, Denmark's bilateral loans.
However, the assistance loan interest rates has not been determined. The implementation of the EU Economic and Monetary Affairs Committee, said Rehn, due to different funding channels, to provide relief for the Irish loan period from 3 to 7 years a half years, the interest rate will be slightly different, the average lending rate is about 6%, may the final decision in the week. Irish media, may be as high as 6.7% interest rate, but Cowen said the average interest rate of 5.8%. French Finance Minister Christine Lagarde said that the final loan repayment assistance for 10 years, Ireland will begin paying after 3 years, the average lending interest rates will be "slightly below" 6% interest rate range is between 5.7 to 6.5% .
Yu Jian permanent settlement mechanism
28 EU finance ministers to respond to future EU on establishing a permanent mechanism for debt crisis agreement, the
Under the mechanism, if not an EU member states that sufficient funds from the debt market, the Irish will be similar to the emergency assistance loan. However, the countries have not yet reached the scale of funding in respect of the same mechanism.
Rehn said that the mechanism may be reference to the scale of 4,400 million euros in European financial stability fund model.
In addition, the German Chancellor Angela Merkel, French President Nicolas Sarkozy, President of the Council of Europe permanent and the European Central Bank President Jean-Claude Trichet Rompuy joint proposal to require the creditors of the EU commitment to private sector debt problems of the future EU Member States part of the loss.
Euro group president, Juncker of Luxembourg after the meeting, said at a news conference, according to the agreement reached by euro-zone finance ministers, the euro zone next to establish a permanent mechanism for crisis response into a debt crisis in the Member States to provide relief when with bonds and other debt of the country's private investors need to take some losses, such as extending the repayment period or reduce the interest payments.
However, Juncker stressed that the private investors to foot the bill for the practice of sovereign debt crisis is only expected in mid-2013 for the establishment of the euro zone after the permanent crisis response mechanism, when the euro-zone government bonds issued by the State must include this clause, whether True investors will bear the loss of case management, Greece and Ireland is currently possible in other euro countries the debt crisis, the establishment of mechanisms for the temporary relief does not apply to this practice.
Increased credit risk in Germany
The sovereignty of other European countries compared with the price of credit default swaps, the recent EU member states "aid big" CDS Germany as one of the largest price increases in France, the Netherlands and other EU member states CDS core prices rose sharply . Last week, the state and includes Denmark, Norway and Iceland, non-euro area member states, including CDS spreads widened to the highest since the euro was launched.
Market is expected to obtain aid money after following the Ireland, Portugal, Spain and even Italy are likely to join the ranks of application assistance. University of Frankfurt professor William said: "If Germany continues to provide loan funds to the EU Member States, the country will likely bear the risk of bankruptcy." Analysts pointed out the debt if there is any negative news in Germany, the euro will face a "drowned the disaster. "
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