The latest Monetary Dialogue briefing papers for the European Parliament’s Committee on Economic and Monetary Affairs are available here (click on 21.6.10). These papers are provided to help the MEPs on the committee prepare for their June 21 meeting with President Trichet, which promises to be an interesting one. My paper is titled “The Euro, the ECB and the Sovereign Debt Crisis”. All the papers focus on different aspects of the European sovereign debt issue.
Author: Karl Whelan
The ECB has released its latest weekly financial statement, the only source of public information in relation to what’s happening with its sovereign bond purchase program.
It is notable that the program has purchased smaller amounts with each passing week: €16.3 billion during the week ended May 14, €10.4 billion during the week ended May 21, €8.8 billion during the week ended May 28 and €4.9 billion during the week ended June 4. We know that some members of the Governing Council would like the program to end quickly. At this rate of decline, it will be over in a couple of weeks.
Here‘s the text of the agreement on budgetary policies put together by the EU finance ministers yesterday. It seems pretty weak, with little by way of new concrete initiatives. It’s full of aspirations to reduce deficits. The new element that might have been expected in relation to an increased role for the European Commission is restricted to the following statement:
Ministers are committed to fully and strictly implement the surveillance framework defined by the SGP and to contribute actively to the Task Force set up by the President of the European Council, which will consider ways to strengthen the fiscal surveillance framework as well as the surveillance of competitiveness developments in the euro area.
A Task Force that’s going to “consider” things doesn’t sound like much to get excited about.
Here‘s the statement tasking the European Commission with running the €440 billion Special Purpose Vehicle. (You have to love how there’s a Special Purpose Vehicle at the scene of every economic disaster these days.)
Commenter Eoin asks a good question “Should the ECB be doing quantitative easing?” My thoughts are as follows.
Last week, I provided calculations from annual reports showing that at the end of 2009, the banks covered by the State guarantee owed €71 billion in various types of bank debt (bonds, commercial paper, interbank loans) that matured before the end of the year (the reports did not provide information on how much matured prior to expiry of the guarantee at the end of September.)
The Department of Finance have now provided figures as of the end of April on how much covered debt expires before October. In a written answer to a question from Joan Burton, the Department have stated that €74.2 billion in bank debt expires before the end of October, €57.8 billion of this being senior debt and €16.4 being interbank deposits.