Euro Zone

Hugo Dixon: Greek bank recap is race against time

5 Oct 2015

Capital must be injected by year-end to avoid a disastrous bail-in of uninsured depositors. To meet the deadline, Europe’s central bank must finish its stress test and decide how much capital is required. The banks then need time to see if private investors will take part.

EU establishes bridgehead in capital markets push

30 Sep 2015

Brussels is to unpick self-defeatingly high capital charges against infrastructure and asset-backed bonds. It is capital markets union’s first tangible win. Yet other barriers like diverging insolvency regimes have been shelved, and tighter regulation is making trading harder.

Draghi lacks arrows to hit ECB’s inflation target

30 Sep 2015

Euro zone consumer prices are falling again, putting near-2 percent inflation further out of central bank President Mario Draghi’s reach. He could ramp up asset buying, but inflation seems ever less responsive to monetary policy globally. Higher prices might be beyond his gift. 

Hugo Dixon: It’s all up to Tsipras now

21 Sep 2015

The leftist politician’s electoral triumph means domestic forces can’t impede him in implementing Greece’s 86 billion euro bailout deal. The big question is whether Alexis Tsipras has the will and the competence to do so. If not, his victory could soon turn to disaster.

Debt markets mistake Spain for Italy

18 Sep 2015

Last year the Iberian country was being compared by investors to safe Germany. Now foggy politics mean investors want a higher return than on Italian debt. The political premium looks temporary: Spain is faster-growing and no riskier than its Mediterranean cousin. 

German sovereign bail-ins work in alternate world

11 Sep 2015

Finance Minister Wolfgang Schaeuble wants automatic extensions in state bailouts, as a riposte to proposals for common bank insurance. It’s a logical plan. Yet given it looks hard to implement and could undermine fragile euro zone stability, it’s more of a delaying tactic.

Breakdown: Migrant crisis reshapes Europe politics

8 Sep 2015

The number of people flooding into the continent is only a small part of the story. More worrying: old political anxieties are being rekindled. While migration won’t immediately affect economic issues like Greece’s bailout or the euro, it could jeopardise European cohesion. 

Renzi turns reform steamroller to Brussels

8 Sep 2015

Italy’s prime minister, dubbed “the scrapper”, is promising tax cuts. It looks like a challenge to Europe’s fiscal rules. Yet lower corporation taxes are needed, and the ECB will probably keep markets calm. The flipside is that Matteo Renzi’s plan requires that mooted spending cuts actually happen.

Italy rushes through one last flawed bank bailout

7 Sep 2015

Europe is weeks away from a new regime that makes creditors and depositors pay for bank rescues. Yet Rome is still asking Italian banks to pony up 1.4 billion euros to save three small lenders. Bail-ins are unpredictable, but the proposed solution risks leaving the system weaker.

Europe’s fuzzy capital markets union takes shape

4 Sep 2015

The European Commission is mulling a directive to harmonise member states’ various insolvency regimes. If common principles can be nailed down, bankruptcy will get smoother. And the Juncker commission’s goal of better integrated capital markets would have a hope of success.

Catalan vote a sideshow to national election

4 Sep 2015

Secessionist parties want to kick-start the road to independence in the Spanish region if they win the election on Sept. 27. But even if they prevail, the hurdles to full-blown independence look high. Investors should fret about Spain’s general election in December instead.

IMF misses chance to help global policymakers

3 Sep 2015

The lender’s warning on global economic risks lacks what policymakers need: insight into what’s happening to China and why market ructions have been so severe. G20 finance officials heading for Turkey need meatier, more challenging views than the IMF seems prepared to give.

Hugo Dixon: Greek election may reopen can of worms

31 Aug 2015

Given that no party is likely to emerge from next month’s vote with a majority, it may be hard to form a strong government that can implement the country’s new bailout deal. There’s even a risk that there will be yet more elections. That could tip Greece back into crisis.

Greek elections no cause for great worry

20 Aug 2015

Alexis Tsipras is likely to win a mandate for his U-turn in accepting a tough bailout programme and re-emerge as leader of a more moderate government. The main problem is there will now be a one-month hiatus when little will be done.

Rebellious Germans ignore Greek silver lining

19 Aug 2015

German Chancellor Angela Merkel is facing a revolt from her own party over the Greek bailout. The fear that Greece is a bottomless pit is fair. But it’s not all lost money: nearly a third of the 86 bln euro loaned will repay debt to public creditors, including Germany.

Hugo Dixon: Greece may not need debt haircut

17 Aug 2015

No single measure, such as debt to GDP, adequately captures how unsustainable Athens’ balance sheet is. Most other yardsticks show Greece needs debt relief. But cutting the face value of its borrowings is probably not required.

Review: Euro was the path of least embarrassment

14 Aug 2015

Valerie Caton’s history of French policy around the single currency could be read as a chronicle of meetings, position papers and fuzzy compromises. It is better to see a tale of European leaders grudgingly living up to their historic destiny. More of that, and the euro can survive.

Greek bank bail-in threat starts to recede

13 Aug 2015

Savers have rightly feared their deposits may get turned into equity. Draft proposals for Athens’ new bailout imply this may be unnecessary. It probably isn’t enough to entice private investors, but boosting depositor confidence is an important step in clearing up Greece’s mess.

RWE reform spark smothered by politics

10 Aug 2015

The stricken German utility plans to cut red tape, but it really needs to cut staff. EBITDA per employee has fallen 28 percent since 2010. While rival E.ON has opted for a radical breakup, RWE would struggle to sell tough action to its political shareholders.

Hugo Dixon: How to fix Greece’s banks

10 Aug 2015

The banks are the weakest point in the country’s economic system. They need to be repaired in order to lift capital controls, restore depositor confidence and finance a future recovery. There are some good ways of doing this, even if the best options aren’t making much headway.