Germany backs tests release
By Timothy Heritage |
June 18, 2010, Friday
|
Print Edition
Print Edition
GERMANY joined major European partners yesterday in backing the publication of bank "stress tests" and the euro rose on a successful Spanish bond sale as European Union leaders met to agree on tighter budget rules.
Berlin, which had been sceptical about revealing details of tests on the financial health of its banks, dropped its objections after France and Spain came out in favor of a move the Obama administration has pressed Europe to take.
"Germany is positive on the idea of publishing the results of EU stress tests," said Finance Ministry spokesman Michael Offer. "We see that markets are unsettled and that confidence among banks has taken a hit."
Earlier French Economy Minister Christine Lagarde, speaking to Reuters Insider television in Paris, had thrown her weight behind rapid publication of stress tests, saying French banks had strong balance sheets and nothing to hide.
The run-up to yesterday's EU summit in Brussels was dominated by concern that Spain, the eurozone's fourth-biggest economy, might be forced to tap a 500 billion euro (US$613.2 billion) EU safety net set up to halt contagion after a bailout of Greece.
But leaders played down Spain's troubles and said the country was not discussed at the one-day meeting.
Markets across Europe received a boost when Madrid succeeded in selling 3.5 billion euros in 10- and 30-year bonds, squeezing investors who had shorted the single currency.
To reassure investors, Spain, France and other euro members have unveiled a flurry of austerity measures and structural economic reforms in recent days, helping the euro recover from four-year lows against the dollar.
The publication of bank stress tests could also help calm jittery investors as long as the results don't reveal unexpected holes in banks' books. An EU source told Reuters the tests would not be unveiled this month, but France and Spain said the sooner they were out there, the better.
"If someone suspects you have an illness, it's all very well to say 'No, no, no I'm very healthy,' but it's even better if you say 'OK fine, take my blood and make sure that I'm healthy'," Lagarde said, saying the results should be made public ideally before the end of July.
Germany, home to regional Landesbanken that were hit hard by the global financial crisis and have yet to fully recover, had been concerned it could be forced to recapitalize ailing institutions.
European Central Bank Governing Council member Erkki Liikanen said trust would return if the stress tests were made public.
Berlin, which had been sceptical about revealing details of tests on the financial health of its banks, dropped its objections after France and Spain came out in favor of a move the Obama administration has pressed Europe to take.
"Germany is positive on the idea of publishing the results of EU stress tests," said Finance Ministry spokesman Michael Offer. "We see that markets are unsettled and that confidence among banks has taken a hit."
Earlier French Economy Minister Christine Lagarde, speaking to Reuters Insider television in Paris, had thrown her weight behind rapid publication of stress tests, saying French banks had strong balance sheets and nothing to hide.
The run-up to yesterday's EU summit in Brussels was dominated by concern that Spain, the eurozone's fourth-biggest economy, might be forced to tap a 500 billion euro (US$613.2 billion) EU safety net set up to halt contagion after a bailout of Greece.
But leaders played down Spain's troubles and said the country was not discussed at the one-day meeting.
Markets across Europe received a boost when Madrid succeeded in selling 3.5 billion euros in 10- and 30-year bonds, squeezing investors who had shorted the single currency.
To reassure investors, Spain, France and other euro members have unveiled a flurry of austerity measures and structural economic reforms in recent days, helping the euro recover from four-year lows against the dollar.
The publication of bank stress tests could also help calm jittery investors as long as the results don't reveal unexpected holes in banks' books. An EU source told Reuters the tests would not be unveiled this month, but France and Spain said the sooner they were out there, the better.
"If someone suspects you have an illness, it's all very well to say 'No, no, no I'm very healthy,' but it's even better if you say 'OK fine, take my blood and make sure that I'm healthy'," Lagarde said, saying the results should be made public ideally before the end of July.
Germany, home to regional Landesbanken that were hit hard by the global financial crisis and have yet to fully recover, had been concerned it could be forced to recapitalize ailing institutions.
European Central Bank Governing Council member Erkki Liikanen said trust would return if the stress tests were made public.
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