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3 Apr 2013
Forex Flash: Bank recap scheme dumped in favor of market fundamentalist approach - Nomura
FXstreet.com (Barcelona) - Nomura research Institute Chief Economist Richard Koo believes that the bank recapitalisation scheme has been dumped in favour of a market fundamentalist approach.
He comments that at a time when the situation in the Eurozone was growing worse by the day, developments took a surprising turn after the Dutch finance minister Jeroen Dijsselbloem, a market fundamentalist who believed taxpayers should not have to contribute any further to bank bailouts, became chairman of the Eurogroup of Eurozone Finance Ministers.
He sees that the Eurozone had been moving ahead with preparations to allow the €700bn European Stability Mechanism (ESM) to inject capital directly into distressed banks. But before the mechanism could be launched in 2014, policy embarked on a very different course under Mr. Dijsselbloem. Koo finishes by writing, “I find it surprising that Europe, which is home to so many social democrats, adopted these policies at the worst possible time while the US, where market fundamentalists hold greater sway, moved quickly to rescue the broader banking system.”
He comments that at a time when the situation in the Eurozone was growing worse by the day, developments took a surprising turn after the Dutch finance minister Jeroen Dijsselbloem, a market fundamentalist who believed taxpayers should not have to contribute any further to bank bailouts, became chairman of the Eurogroup of Eurozone Finance Ministers.
He sees that the Eurozone had been moving ahead with preparations to allow the €700bn European Stability Mechanism (ESM) to inject capital directly into distressed banks. But before the mechanism could be launched in 2014, policy embarked on a very different course under Mr. Dijsselbloem. Koo finishes by writing, “I find it surprising that Europe, which is home to so many social democrats, adopted these policies at the worst possible time while the US, where market fundamentalists hold greater sway, moved quickly to rescue the broader banking system.”