BUSINESS

Jitters from Eurogroup failure

TAGS: Finance

Tuesday’s inconclusive Eurogroup teleconference, which will resume on Thursday, sent jitters across European markets, which had expected a decision to protect eurozone economies from the coronavirus avalanche. However, Greece’s securities fared much better on Wednesday thanks to the return of the European Central Bank’s waiver that allows Greek bonds to be used as collateral for local banks to secure liquidity again.

Greek Finance Minister Christos Staikouras stated on Wednesday morning that “the Eurogroup meeting has not ended up in an agreement, despite the fact that there was significant progress regarding a more ambitious package of measures.” He added that “there remain some differences between eurozone member-states in spite of the considerable progress, but it is estimated they will be covered” in Thursday’s second round of talks.

Greek bond yields eased somewhat on Wednesday, against a rise in Italian yields, while the Athens bourse enjoyed a third day of gains. 

Reuters reported that the European Central Bank warned the eurozone finance ministers that the bloc will require financial measures totaling 1.5 trillion euros to tackle the crisis induced by Covid-19. However, after 16 hours of negotiations until early yesterday, Germany, the Netherlands and other Northern European states insisted they would only support interventions totaling 500 billion euros, according to participants in the talks.

German Finance Minister Olaf Scholz expressed hope that by the end of this week there will be an agreement for a multi-billion-euro package, without the assistance granted through the European Stability Mechanism being burdened by bureaucratic inspections such as those in the debt crisis of the 2010s. “Solidarity will have to be swiftly organized,” he stated in Berlin.

During the course of the Eurogroup the European Commission estimated that the eurozone economy will shrink by 10 percent this year, but the standoff – mainly between the Netherlands and Italy – prevented the achievement of a deal, which is expected on Thursday.

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