Things may get even worse before they get better in the European economic crisis, Reuters reports. The European Central Bank is pressuring for a joint guarantee on bank deposits across the euro zone, amid worries that bank runs will spread like wildfire as investors head for the hills. Top economic official of the European Commission Olli Rehn cautioned that without added monetary discipline, Europe will descend into a financial chasm.
Severe worries
The euro currency has deflated to a two-year low against the U.S. dollar due to concerns that Greece may not survive and Spain's banking system could collapse. Austrian and French bonds have 10-year yields at their low since the introduction of the euro, but European speculators are putting cash in nonetheless.
Because of a massive real estate crash in May, the fourth-largest lender in Spanish banking, Bankia, was nationalized. Spanish banks have lost as much as $82 billion recently. The banks have moved money as easily as possible in March at a quicker rate than has been recorded since transactions began being recorded in 1990, according to the Associated Press.
No bailout for you
In order to keep the European economy from getting even worse, there were rumors that there can be a Spanish bank bailout from International Monetary Fund. This was denied by International Monetary Funding Managing Director Christine Lagarde.
"There is no such plan. We have not received any request to that effect and we are not doing any work in relation to any financial support," said Lagarde.
At the same time, there is a June 17 Greek general election that will determine the nation's future with regards to the euro zone. The SYRIZA leftists are not winning right now; the New Democracy party is winning, and that party is for bank bailouts. Ireland voters want the European Union to help out a bit, according to the New York Times, which is why it wants the government to approve a referendum.
A demand for clarity
According to Mario Draghi, European Central Bank President, nations have to be put in order with the Euro quickly by European leaders. Not everyone in the euro zone will get help and economic policy from the ECB.
"We will avoid bank runs from solvent banks. Depositors' money will be protected if we build this European guaranteed deposit fund. This will assure that depositors will be protected," said Draghi.
German Chancellor Merkel is one person who has suggested that Europe should consider options since Germany has been unwilling to support the union with its taxpayers' money in the past. It is the paymaster of the European Union, but the ECB wants a joint deposit guarantee for depositors.
"There are integration steps which will require treaty changes. We are not at that stage today but nevertheless there are no taboos," she said at a news conference.
A ton of concern will not help
Draghi testified before EU lawmakers that the European financial crisis has set financiers across the euro zone on edge, but that warning is not what's required at this time.
"I urge all governments to keep this in mind, because it is better to err by too much in the very beginning rather than by too little," he said, citing the recent failures of Spain's Bankia and the French-Belgian bank Dexia.
Severe worries
The euro currency has deflated to a two-year low against the U.S. dollar due to concerns that Greece may not survive and Spain's banking system could collapse. Austrian and French bonds have 10-year yields at their low since the introduction of the euro, but European speculators are putting cash in nonetheless.
Because of a massive real estate crash in May, the fourth-largest lender in Spanish banking, Bankia, was nationalized. Spanish banks have lost as much as $82 billion recently. The banks have moved money as easily as possible in March at a quicker rate than has been recorded since transactions began being recorded in 1990, according to the Associated Press.
No bailout for you
In order to keep the European economy from getting even worse, there were rumors that there can be a Spanish bank bailout from International Monetary Fund. This was denied by International Monetary Funding Managing Director Christine Lagarde.
"There is no such plan. We have not received any request to that effect and we are not doing any work in relation to any financial support," said Lagarde.
At the same time, there is a June 17 Greek general election that will determine the nation's future with regards to the euro zone. The SYRIZA leftists are not winning right now; the New Democracy party is winning, and that party is for bank bailouts. Ireland voters want the European Union to help out a bit, according to the New York Times, which is why it wants the government to approve a referendum.
A demand for clarity
According to Mario Draghi, European Central Bank President, nations have to be put in order with the Euro quickly by European leaders. Not everyone in the euro zone will get help and economic policy from the ECB.
"We will avoid bank runs from solvent banks. Depositors' money will be protected if we build this European guaranteed deposit fund. This will assure that depositors will be protected," said Draghi.
German Chancellor Merkel is one person who has suggested that Europe should consider options since Germany has been unwilling to support the union with its taxpayers' money in the past. It is the paymaster of the European Union, but the ECB wants a joint deposit guarantee for depositors.
"There are integration steps which will require treaty changes. We are not at that stage today but nevertheless there are no taboos," she said at a news conference.
A ton of concern will not help
Draghi testified before EU lawmakers that the European financial crisis has set financiers across the euro zone on edge, but that warning is not what's required at this time.
"I urge all governments to keep this in mind, because it is better to err by too much in the very beginning rather than by too little," he said, citing the recent failures of Spain's Bankia and the French-Belgian bank Dexia.
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