“The Dutch minister seem to us an appropriate person, but fundamentally, it’s a matter of institutional calculations,” Luis de Guindos, the Spanish finance minister, said today in explaining Madrid’s abstention. “Spain has taken a position in regards to a situation that it considers is unjust, which is the representation to the European institutions.”
Madrid has a particular reason to complain, since it has been completely shut out of the top jobs after losing a Spaniard on the ECB’s executive board last year, despite being the euroszone’s fourth largest economy. Dijsselbloem said he has invited De Guindos to The Hague to discuss the issue. The Spaniard has accepted, officials said.
After the jump, a run-down of the triple-A’s recent winning streak: Read more
But EU officials now acknowledge that the Brussels meeting of the so-called “eurogroup” will not make any final decisions on Greece amid continued debate over how much debt relief Athens needs – and how fast it should come. That means a long-delayed €31.3bn aid payment will be delayed yet again.
One EU official said that despite hopes, the key part of a highly-anticipated report from international monitors – known as the “troika report” because it is compiled by the European Central Bank, International Monetary Fund and European Commission – will not be ready in time for tonight’s meeting: the debt sustainability analysis, which remains a point of contention. Read more
The European Central Bank’s recent decision to be a lender of last resort in government bond markets is a turning point in the governance of the eurozone. By committing itself to unlimited government bond purchases, the ECB prevented a panic that would have pushed governments into liquidity and solvency crises, destroying the eurozone. Read more
Senior members of the European Parliament’s economic affairs committee met yesterday for a brief coordinating session and decided to, yet again, postpone the confirmation hearing for Yves Mersch, the Luxembourg central banker whose quest to secure the empty seat has been the subject of intense internecine fighting for more than nine months.
To update readers, Mersch’s nomination is now being held up by the committee because they believe no woman candidate was seriously considered for the post. Herman Van Rompuy, president of the European Council, wrote to the parliament in the last week to explain leaders’ positions – but committee members found the response “very thin,” prompting the decision to put off a confirmation hearing again.
Sylvie Goulard, a French liberal MEP who is a senior member of the committee, told Brussels Blog in an e-mail she found the Van Rompuy letter “empty (and quite insulting)”. Excerpts from the letter are after the jump. Read more
The head of the Luxembourg central bank was, at first, not even considered a leading candidate for the position, which was being vacated by a Spaniard and, Madrid assumed, would be filled by a Spaniard. But a caucus of northern European countries balked at putting another southerner on the board, so inflation hawk Mersch became their candidate.
That set off months of nasty backroom battles, where the Spanish insisted on compensation – at one point they held out for the head of the new €500bn eurozone rescue fund, which was supposed to go to German economist Klaus Regling – in exchange for acceding to Mersch. Luxembourg retaliated by holding up plans to give Spain more time to hit tough budget targets.
It’s no mere academic exercise; a full-scale bank run would force the European Central Bank and eurozone lenders to either pump in more money – without a new government in place, and no assurances Athens would live up to the rescue terms – or pull the plug on Greece’s financial sector.
Since a banking sector without a central bank would essentially force Greece back to the barter system, there would be few options left then for Athens to begin printing its own currency again. Essentially, the drachma would return through the back door.
As we reported in today’s dead-tree edition, senior eurozone officials responsible for monitoring the currency area’s banking system said the rate of withdrawals thus far falls short of a panic. But the International Monetary Fund’s recent report on Greece makes it clear that a slow-motion bank run has been under way for more than two years, with close to 30 per cent of deposits being pulled out since the end of 2009. Read more
Belgium's finance minister Steven Vanackere talks to colleagues at the Copenhagen meeting.
Our front page story in tomorrow’s dead tree version of the FT includes lines from confidential analyses distributed to European Union finance ministers at their gathering in Copenhagen. As usual, we thought we’d offer a bit more from the documents here at the Brussels Blog.
Among the most interesting elements in the documents are discussions about Europe’s banks, which have seen a surge in confidence thanks to the European Central Bank’s €1tn in cheap loans, known as LTRO for long-term refinancing operations.
One of the analyses in particular – the three-page “Assessment of key risks and policy issues” prepared by the EU’s economic and policy committee – warns that there are new signs of instability in the European banking sector. Details after the jump… Read more
“I actually wonder why this has to be asked at all,” said the EU’s top economic official, Olli Rehn. “The principle in the European Union and the long European legal and historical tradition is, in Latin, pacta sunt servanda – respect your commitments and obligations.”
So what commitment is Ireland trying to avoid, and why? Jamie Smyth, the FT’s Dublin correspondent, answers our questions.
A screen in Hong Kong displaying the Hang Seng index’s turbulent day today. Image AP
Welcome back to the FT’s coverage of the eurozone crisis and its global fallout. Curated by John Aglionby, Tom Burgis and Orla Ryan on the news desk in London and with contributions from correspondents around the world. All times are GMT.
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Market reaction to events in Italy shows that the crisis is now truly global. Markets are looking for more clarity from Rome on timings, particularly of the austerity vote. Meanwhile the saga of finding a new Greek prime minister rumbles on.
Peter Spiegel is the FT's Brussels bureau chief. He returned to the FT in August 2010 after spending five years covering foreign policy and national security issues from Washington for the Wall Street Journal and the Los Angeles Times, focusing on the wars in Iraq and Afghanistan. He first joined the FT in 1999 covering business regulation and corporate crime in its Washington bureau, before spending four years covering military affairs and the defence industry in London and Washington.
Joshua Chaffin is one of the FT's EU correspondents, covering areas including policies on trade, the environment and energy. He has worked in the FT's Brussels bureau since late 2008 and before that was an FT correspondent in New York and Washington DC.
Alex Barker is EU correspondent, covering the single market, financial regulation and competition. He was formerly an FT political correspondent in the UK and joined the FT in 2005.
James Fontanella-Khan is FT's Brussels correspondent, covering media, telecom and internet regulation as well as justice, employment and social affairs and its impact on eastern Europe. He was formerly an FT correspondent in India. He joined the FT in 2006.