December 26, 2011

ECB and IMF looking for crisis solutions

'ECB en IMF onderzoeken crisismaatregelen' (by @mathijsbouman /twitter)

ECB and IMF looking for crisis solutions
The European Central Bank (ECB) and the international monetary fund (IMF) are doing research concerning possibilities to combat the debt crisis mutually. That was reported by press agency Reuters today.


According to sources both institutions talked about possibilities of the ECB to lend money to the IMF. This to ensure that the fund has enough resources to keep  also of larger European economies out of the fire. With that construction the restriction  of financing the sovereign debts of countries by the ECB can be circumvented. According to those sources the plans haven not left the drawing board. "For the time being it is just a idea" one of them stated.



France

Among economists there is a growing call for a bigger role for the ECB in the struggle to overcome the crisis. Also France would like to see that the
unlimited funds of the central bank would be used to calm the unrest on the markets. According to them this can be realized through providing the EFSF with a banking license in order to make it possible to lend money from the ECB. The EC and Germany however resolutely rejecting this bigger role for the time being. They think the governments must resolve the crisis by themselves by reforming their economies and to sort out their budgets. The central bank does momentarily intervene in the bond market in an attempt to prevent that the interest rates for coutries to pay over their debt to get out of hand. The ECB has always emphasized however that the interventions were restricted in time and scale.

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