Eurozone Weekly Economic Briefing: 10 Feb 2012

Oxford Economics
February 10, 2012
9 Pages - SKU: OFE6823967
The ECB's three-year long-term refinancing operation (LTRO) executed at the end of last year has contributed to a significant improvement in financial conditions in the Eurozone. Sovereign yields have fallen, especially in Italy and Spain, bank funding pressures have eased and stock markets have rebounded. There is little doubt that the LTRO has greatly reduced the risk of liquidity-driven bank collapses in the Eurozone a risk that was very real in late 2011. But the LTRO is not a panacea for the Eurozone's woes. It risks tightening the bank-sovereign link in some countries, increasing the systemic risk from pressures on public finances. It also risks making the banking sector dangerously dependent on ECB funding and reducing the flexibility of bank balance sheets. Finally, it is unlikely to prevent a significant tightening of credit conditions in the Eurozone this year that will contribute to recessionary conditions with an inevitable negative feedback into government finances. The LTRO is mostly about crisis management and, if the ECB wishes to stimulate the Eurozone economy, it would be better to do so through a quantitative easing programme.



More International Trade reports by Oxford Economics

Country Economic Forecasts - Taiwan by Oxford Economics
Country Economic Forecasts - TaiwanTaiwan GDP surprised on the upside in Q2 as private consumption rebounded after weakness in Q1 while export volumes continued to ...
Country Economic Forecasts - India by Oxford Economics
Country Economic Forecasts - IndiaThere was widespread optimism that the new government would be able to turn around India’s economic fortunes.Although the BJP government has ...
Country Economic Forecasts - Eurozone by Oxford Economics
Country Economic Forecasts - EurozoneThe Eurozone’s already-insipid recovery slowed further in the second quarter of the year, with quarterly GDP growth dipping from 0.3% in ...
Country Economic Forecasts - Canada by Oxford Economics
Country Economic Forecasts - CanadaThe economy speeded up in May, with the monthly measure of GDP rising by 0.4% on the month.This followed a subdued ...
See all reports like this >>

 

SELECT A LICENSE

    Online Download  USD 85  
    Global Site License  USD 213  
 
US: 800.298.5699
Int'l: +1.240.747.3093
 

Share this report


    Other tasks

     
     
    Join Alert Me now!
    Receive bi-weekly email alerts on new market research

    Sign up today!