EU leaders try to fix long-term economy problems
June 17, 2010 Though the summit's formal focus is on long-term solutions, the
27 EU leaders also face more immediate worries about potential
losses hitting European banks and continuing speculation about
market pressure pushing Spain to seek financial help.
Spain has said it will soon publish results of a review of how
much its banks could lose if the economy worsens and house prices
tumble further, in an effort to calm market worries that the
government may ultimately have to rescue local banks.
Diplomats say most European governments - except Britain and the
Czech Republic - are also in favor of publishing banking "stress
tests" for the first time, as the U.S. did in 2009 to show how
much capital the country's 19 biggest banks needed to raise to cope
with more losses.
"We see that the markets are unsettled and that confidence
between banks is tattered," German Finance Ministry spokesman
Michael Offer told DAPD news agency. "Transparency could be
helpful as a stabilizing factor."
He said EU finance ministers would decide the details on how and
when the tests would be done by national bank supervisors.
EU nations are trying to calm volatile markets worried about
Europe's soaring debts - both public and private. Greece needed a
bailout from EU governments and the International Monetary Fund to
avoid an embarrassing default in May.
A massive "shock and awe" euro750 billion ($1 trillion) financial
rescue package for other indebted countries has failed to halt the
euro's slide in recent weeks as markets eye wider problems across
Europe: a banking system that may not have fully owned up to losses
from the 2008 crisis and the prospect of slow economic growth for
years ahead.