There were increasing clashes between protestors and police in Greece as the Greek parliament voted on fresh spending cuts demanded by the EU and IMF to release another tranche of money. Protests on Wednesday saw record participation in Athens, with at least 100,000 people taking to the streets and clashing violently with police.
EU institutions are seeking to curb the powers of ratings agencies. Plans have been disclosed by EU single market commissioner Michel Barnier to allow Esma, a new Paris-based EU financial supervisor set up in 2011, to impose “temporary” bans on agencies such as Fitch or Moody’s from publishing sovereign debt ratings at critical moments. The draft EU law says the agencies should be gagged during “innopportune moments”, such as negotiations on a new EU bail-out, because their statements could have “negative consequences for the financial stability of the state [undergoing bail-out talks] and potentially destabilisng effects on the world economy.” The discussions come after ratings agencies downgraded Spanish debt and a raft of Italian banks.
The Guardian is reporting that that France and Germany have already reached agreement to boost from €440 billion to €2 trillion the effective firepower of the EFSF, the EU’s Luxembourg-based rescue fund. It added that leaders will inject an extra €100 billion to €200 billion into vulnerable banks. The Financial Times Deutschland said the EFSF will go up to €1 trillion. However, an EU official speaking to the Dow Jones financial newswire poured cold water on the reports, however. “We may have a decision on the size by the summit or just a statement that firepower must be increased. But there is no talk about an amount around €2 trillion,” the anonymous source said.
The current troubles in the eurozone are slowing down growth in eastern European countries, particularly Romania, Albania and Serbia, where Greek banks are an important part of the financial sector, according to a study by the European Bank of Reconstruction and Development (EBRD).Meanwhile, MEPs are in favour of allowing Romania and Bulgaria to join the Schengen zone, having fulfilled all the criteria. MEPs had already given their approval for the two countries in June this year. But the decision has been blocked indefinitely by the Dutch and Finnish governments, both of whom are insisting that the Eastern European countries meet new additional criteria. This has drawn accusations of double standards and of new criteria for membership ‘being invented’.
The European Commission is seeking criminal sanctions for insider dealing and market manipulation to improve deterrence and market integrity. Investors who trade on insider information and manipulate markets by spreading false or misleading information can currently avoid sanctions by taking advantage of differences in law between the 27 EU Member States. The commission hopes that effective sanctions will have a strong deterrent effect and reinforce the integrity of the EU’s financial markets.
Finally, it has been a good week for Switzerland, the rising value of the Swiss franc has catapulted the wealth of the average person in Switzerland to more than $500,000 (£320,000), making residents the richest on the planet, according to the investment bank Credit Suisse. The far-right party Swiss People’s Party (SVP) has said its mascot goat, reported missing over the weekend has been found safe and well. The animal, named Zottel, and fellow dwarf goat Mimo were found tied to a tree and smeared with black paint by “extremist delinquents”. Members of a group called Anti-Fascist Action claimed responsibility for the kidnapping. The BBC reports that the 10-year-old Zottel has been the SVP’s mascot since the 2007 elections, when the party ran a poster campaign across Switzerland depicting three white sheep kicking a black sheep off the Swiss flag. According to the SVP’s website, “Zottel saves Switzerland” and is “against mass immigration”. Strong opinions for a goat.