Indeed, the cutting spending taken in further European countries notably in the public sector should improve the public debt of these countries. We can use the famous English proverb “wait and see”. The EBC seeks to avoid increasing the interest rate in order to keep borrowing cost acceptable, notably for the European country already heavily indebted like Greece, Portugal, and Ireland. Furthermore, the forecasting of inflation wasn’t excepted to 2.2 per cent in December 2010, the EBC forecasted a rate lower.
Adding that, the plans of cutting spending in the public sector launched by many Europeans countries could be weighed on the inflation. Also, according the analysts this inflation will be here and could increase slowly all along of year 2011. Adding that, the speculation on the raw material could equally reinforce the inflation. Mr.Trichet called all the members of European Union to be vigilant. According to him, they must privileged quantity and quality but especially flexibility. Equally, the new stress test will be realized but this once according to EBC criteria. The Stock-holders equity will be observed of near.
These tests will be done in the first quarter of year 2011 in order to give the results for the spring. The last test will show that only seven banks on ninety one don’t respect the debt ratio. The small numbers of bank couldn’t borrow on the open market, the rate being too high and have being obliged to do call to EBC lending them to one rate that they can reimbursed. We can note equally that in 2013, all the capital that detain banks could be foreclosure for erase the debt, and the shareholders could be also paid the debts before the taxpayers.
It’s the time to show that the European financial regulation holds the road…
The European Central Bank Keep the Mainly Director Rate Voluntary Low Originally published in Shvoong: http://www.shvoong.com/society-and-news/news-items/2101249-european-central-bank-mainly-director/
