Econintersect: Cyprus is adding to the Eurocrisis by applying for rescue loans. A Reuters report stated:
Two euro zone sources said the East Mediterranean island, with an outsize financial sector heavily exposed to neighboring Greece, may need up to 10 billion euros in emergency financing, more than half its 17.3 billion euro annual output.
While the sum is easily within the range of the European Financial Stability Facility (EFSF) bailout fund, it sets an awkward precedent and may lead to demands for collateral or for private bondholders to take a write-down as they did in Greece.
Cyprus needs to plug a 1.8 billion euro regulatory capital shortfall in its second largest lender by June 30. Potential aid could be more comprehensive to cover fiscal requirements, Finance Minister Vassos Shiarly told Reuters.
The last 24 hours is bringing much negative commentary to the Eurocrisis. A sampling below with hyperlinks to the major developments.
Lower inflation provided some relief to UK household finances in June, ushering in a slower drop in cash availability and the least downbeat assessment of future finances for over two years. However, the overall picture is by no means akin to ‘fog in Channel; continental woes cut off’, and it will take much more than a dip in inflation to carry this resilience through the second half of 2012.
The supervision of euro-zone banks should be transferred to a European overseer, possibly the ECB, top EU officials said.
Aleksei L. Kudrin, the former minister of finance, warned at a news conference that Russia was in danger of falling into a recession.
The official, Vassilis Rapanos, resigned after being hospitalized, dealing another blow to the new government’s effort to stabilize the economy.
Europe’s drugs industry is urging EU leaders give it two major concessions to help keep medicine supplies flowing into crisis-hit countries such as Greece and Spain.
German Finance Minister Wolfgang Schäuble believes that only further EU integration can save the euro. SPIEGEL spoke with him about how the currency can be strengthened, the hurdles presented by Germany’s constitution and what the 27-member club might look like in five years.
The new government headed by Prime Minister Antonis Samaras plans on a four-year term, but it may struggle to last a fraction of that time.
The new government aims to revoke certain taxes, suspend planned layoffs in the bloated public sector and extend by two years the deadline for imposing additional austerity measures.
The new finance minister said the government would unveil a balanced package of taxes and budget cuts but said it rejected any politics of austerity for France.
Stock markets are slumping due to worries about global growth and ongoing concerns about the Eurozone.
NICOSIA/ATHENS (Reuters) – A fifth euro-zone country turned to Brussels for emergency funding on Monday when Cyprus announced it was seeking a lifeline for its banks and its budget, hours after Spain submitted a formal request to bail out its banks.
(Reuters) – Nomura cut its earnings outlook for Greek banks as financial institutions face sovereign concerns, growth challenges and higher loan-loss charges, and downgraded its rating on the country’s three largest lenders.
As the debt crisis worsens in Spain and Italy, financial experts are warning of the catastrophic consequences of a crash of the euro: the destruction of trillions in assets and record high unemployment levels, even in Germany. By SPIEGEL Staff