Euro finance bosses tackle banks, bailouts

Written By Unknown on Minggu, 02 Desember 2012 | 11.25

EUROPEAN finance ministers will regroup in Brussels for two-day talks focused as much on EU-wide problems installing cross-border banking supervision as on eurozone bailouts.

After a string of emergency Eurogroup gatherings that finally resulted in a deal last week to get Greece's bailout aid back flowing after months in limbo, Monday sees a return to routine among the 17 states that share the currency, from 1600 GMT on Monday (0300 AEDT Tuesday).

The meeting then opens up on Tuesday to include the other 10 European Union states, with the focus on divisions between the two types when it comes to strengthening banks' capital requirements and introducing a single supervision regime.

After Germany's parliament gave its overwhelming approval on Friday for billions of euros in aid, a top eurozone official said Greece will announce on Monday the terms for investors to take up a controversial debt "buyback" underpinning bailout resumption by December 13.

The official said the eurozone would watch "with great interest", after the International Monetary Fund (IMF) said its continued bailout participation would be contingent on results.

Tens of billions of euros in Greek state debt still held by the private sector, mainly Greek banks and insurers, are in play; the idea being that Greece is loaned money to repurchase commercial debt at lower prices.

The buyback is a cornerstone of the agreement to release some 43.7 billion euros ($A54.80 billion) in rescue funding by March, but according to the Institute of International Finance, the powerful bank lobby that has already written off 107 billion euros owed, "uncertainty remains".

Eurobank analysts have said the target reduction overall is 17 billion euros.

The relationships between state debt, bank losses and moves to re-shape a European financial sector fit for a post-boom age of recession and suppressed recovery are the subject of talks on Tuesday.

This is about policing the banking sector more effectively, but only gradually from September next year.

New safeguards are part of wider moves towards fuller economic and political integration judged necessary to break the vicious circle driven by the debt crisis that brought the European economy to a standstill.


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