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Eldridge Financial: EU scrapped plans to centralize bank deposit insurance

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Eldridge Financial Review, Facts, Ideas and Opinions: Markets have rallied on expectations Greece won’t get kicked out the euro, Spain will get the money it needs and the ECB will use its balance sheet to limit potential turmoil. Spanish 10-year bond yields fell to their lowest in six months.


Submitted:Dec 5, 2012    Reads: 5    Comments: 1    Likes: 1   


http://eldrigefinancialreviews.com/eu-scrapped-plans-to-centralize-bank-deposit-insurance/

eldridge financial blog review private clients, EU scrapped plans to centralize bank deposit insurance

Eldridge Financial Review, Facts, Ideas and Opinions: Markets have rallied on expectations Greece won't get kicked out the euro, Spain will get the money it needs and the ECB will use its balance sheet to limit potential turmoil. Spanish 10-year bond yields fell to their lowest in six months.

Spain is at the center of the most pressing banking issue. Rajoy wants a European bailout to inject cash directly into its ailing banks, to relieve it of the burden of paying back as much as 100 billion euros ($131 billion) in bank-rescue loans. Euro leaders are battling over a June pledge to enable direct recapitalizations once a European bank supervisor is in operation, with Germany refusing to set a deadline. Underscoring concern in EU countries that don't use the euro, Swedish Prime Minister Fredrik Reinfeldt said the bank plans are "complicated" and Sweden can't be liable "for losses or problems in other countries' banking systems."

A French official, briefing Eldridge Financial reporters after a meeting between Hollande and Merkel, said agreements in principle were possible. He said Finland, Sweden and the U.K. were the biggest obstacles. With European officials saying no decisions are likely at the summit, the draft of the statement to be issued after the meeting sidesteps how the EU plans to backstop its financial system. It dropped a pledge made after their June gathering to break a cycle of banks and countries worsening each other's woes.

Leaders then in June made a calculated decision to start with unified bank oversight and discuss common cleanup costs later. Yet every element of the bank overhaul draws debate back to the fight over who should pay when a bank fails. The EU has already scrapped plans to centralize bank deposit insurance. A June proposal to replace national deposit guarantees with an EU-wide scheme, billed at the time as an integral step in building a banking union, was deleted from the final version of a September paper prepared by the European Commission. That document called only for national deposit guarantee funds backed by some common rules.

eldridge financial blog review private clients, EU scrapped plans to centralize bank deposit insurance





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