The French President Nicolas Sarkozy again called on leaders of the 20 most advanced economies to work together for comprehensive reform of the global monetary system. “We need to create a new framework for discussion of movements in exchange rates,” said Sarkozy, adding that China is not meaningless to talk about conversion rates. As a reason for it indicates the huge reserves of foreign currency available to the Asian country. Sarkozy said that the stabilization of moving large change currency markets and raw materials will be the main topic of the G-20 are in November. It will pass under the presidency of France, as the country holds the rotating presidency of the G-20 and G-8 November. Important topic will be the need to limit the dominance of the U.S. dollar as primary reserve currency. In this respect, Sarkozy calls for action towards increasing the role of alternative currencies. Improving the coordination of economic policies at the global level is also among the priorities of Sarkozy as he said so you can be battled volatile exchange rates. This is necessary as a prevention against the accumulation of significant reserves, particularly in developing countries.
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The European banks will be subjected to more frequent stress tests to be strengthened, thus investor confidence in the banking system in the old continent. It told the Bloomberg European Commissioner for Economic and Monetary Policy Commissioner Olli Rehn, specifying that regulatory authorities in the European Union (EU) to consider in what interval to repeat testing of credit institutions in Europe. According to Olli Rehn, stress tests are very important and useful tool for restoring confidence in the financial system and ensure transparency in the banking sector. He added that through them that will provide information for making a solid and reliable analysis of its condition. Olli Rehn plans to discuss the introduction of more frequent testing of banks with the 27 EU finance ministers at the meeting with them, which will be held on 7 September in Brussels. Financial regulators in Europe each year to undergo stress tests the largest banks in the EU. In July were tested 91 of the largest European banks, which account for 65% of the banking industry on the continent. Of these, seven did not pass, including Germany mortgage lender Hypo Real Estate Holding, Greek Agricultural Bank of Greece and five savings banks in Spain. Tests showed that they have enough capital to avoid bankruptcy in case of re-recession and depreciation of government securities.
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The volume of equity investments in Europe rose by 211 percent in the first half of 2010 on an annual basis, according to a new report. According to data from market research company unquote “value of equity investments during the period reached 25.2 billion compared with 8.1 billion for the same period of 2009. The number of transactions has also observed a significant increase of 23 percent, rising to 555 compared to 451 transactions during the first six months of 2009. Only in the second quarter of 2010 were concluded over 300 transactions, an increase of 18% compared with the first. The volume of transactions was also demonstrated these positive developments, the total value of transactions for the second quarter rose to 13.9 billion by the IRO 11.4 billion for the first, or growth of 22 percent on a quarterly basis, the report . In comparison, the volume in the second quarter of 2009 was 4.8 billion. Momentum in the sector is mainly due to purchases in which the activity increased by 56% to 167 transactions compared with 107 deals for the first six months of last year.
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The Labour Commissioner Karel De Guh said that China should improve investment opportunities for foreign companies in the country, said “serious questions” that puts European business practices in connection with the Chinese procurement market, says the Wall Street Journal. During his visit to the Shanghai World Exposition (World Expo) Guh stressed that China should ensure transparency and openness of its market procurement and noted that all the rules that distort competition, hampering economic growth. In response to remarks by European Commissioner, Chinese Vice Minister of Commerce Gao Huchan said that the policy of the Chinese government is strongly opposed to protectionism. Guh said that Chinese investment in Europe remain relatively low until the GAO sees possibilities for cooperation between Europe and China in high technology and green energy. Between 2004 and 2008, European imports from China grew by an average of 16.5 percent per year, although because of the global financial crisis experienced a drop of 13% in 2009.
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The Greek economy is in difficulty, and its financial system is under pressure since the country became the epicenter of the biggest crisis in the history of the euro area. However now it seems that Greek banks will pass through the stress test of the banking system in Europe. A similar paradox is seen in Europe. While regulators prepare to publish the results of stress tests of the largest European banks on Friday, political and financial leaders sound surprisingly optimistic in their expectations of the outcome, writes Wall Street Journal. Sentiment among investors are fundamentally different, as many believe that some European banks experiencing serious difficulties. Given that the U.S. government made 10 of 19 largest banks in the country to attract more capital after the stress testing them in 2009, very good results in Europe may undermine the feeling of confidence that European politicians try to regain. According to economists of the Royal Bank of Scotland if the Greek banks withstand the test without a problem, the markets may appear skeptical about whether the tests were sufficiently stringent and that give an objective assessment of the state of the financial system of the Old Continent. One of the banks that tests will show that there are difficulties, the German mortgage lender Hypo Real Estate. It told the Wall Street Journal source familiar with the matter. We Hypo Real Estate is 100% government ownership, is expected to pass their toxic financial assets of 200 billion of bad bank “, supported by the Fund German financial market stabilization (SoFFin). Hypo may request a further 2 billion capital Sofiin, having already received 8 billion.
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The youth unemployment in Britain, educated, could reach record levels due to planned cuts in public spending. This warning by the British Centre for Career Development, Air Force forward. The center of Higher Education Careers Service (HECSU) indicate that as many young people graduating college, seeking employment in the public sector, they are particularly vulnerable under the proposed cuts. The working positions which they normally cupy, are not considered so important by the government to be maintained. If one fifth of the 39 thousand just graduates who start work in the public sector each year lose their jobs, it will double the unemployment rate in this population group. It is expected that about 600 thousand jobs in the public sector to be cut by 2016. According to Charlie Ball Higher Education Careers Service of unemployment graduates young people can reach over 20% and even 25 percent, since its highest level was recorded in 1983 at 13.5 percent.
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Euro recorded strong growth of over 2 percent against the U.S. dollar yesterday, gaining support from weak U.S. economic data and encouraging signals of financial stability in the euro area. This caused a significant drop in the price of oil and gold, which yesterday lost more than 3% of its value. The single currency has reached the level 1,25 EUR / USD, which is its highest value since June 21. The appreciation came after news of another problem in the U.S. housing market and because of data problems in the labor market and the slowing of production activity. Meanwhile, the ECB yesterday organized an auction for commercial banks’ lending, which was used quite a bit of financial institutions. This and the success of the bond issue in Spain, have strong support of the single currency. On the New York Stock Exchange yesterday, oil contracts with delivery in August dropped by 3.5 percent to 72.95 dollars a barrel. This is the lowest cost of raw material from 8 June onwards, and earlier this morning quotes remain at the same level. This means that travel week black gold has dropped by as much as 7.2 per cent, taking the greatest decrease in the week since May 7.
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Shaken by successive government crisis and more than ever divided between Flemish and Francophone Belgium took today, July 1, the Presidency of the European Union. Relay is taken from Spain by the Belgian Community leadership will continue until the end of the year. The 12th Belgian presidency comes at a critical moment in which unsolved problems and unfinished tasks are immensely, said yesterday. Among them stand the completion of the reform of regulations in the banking and financial sector, earning a European diplomatic service, strengthening European economic governance. The new Belgian government would intervene in power before October and the new ruling will not have much time to adapt. The previous government withdrew in late April when Prime Minister Yves Lyoterm resign after the Flemish liberal party Open VLD withdraw its support for the cabinet.
Czech scenario?
There is concern not to repeat the Czech scenario in which the EU has witnessed in the first half of last year. Then the Czech government fell from power – in the middle of the commitment of the Community presidency, leading to total loss of influence of Prague on European affairs. “Of course, Belgium is a European belief, but a country whose future is uncertain, not enjoy the great political trust,” said the agency Christian Frank, a professor at the Institute for European Studies at the Catholic University of Louvain.
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The French Government announced on Friday a new tax increase amounted to 3.5 billion in 2011, reported Financial Times. The total increase in tax revenue next year will reach 13.2 billion, ahead of Germany’s program to reduce the budget deficit amounting to 11 billion euros in 2011. Revenue from the increase, however, retreated to the increase in VAT by 2,5 percentage points in Britain next year, which is expected to bring 12.1 billion pounds (14.7 billion). The series of tax increases to reduce budget deficit expected for this year’s 8 percent of GDP to 6% in 2011 as promised to the European Union (EU). The plans are based on forecast economic growth of 2.5 percent next year, the International Monetary Fund (IMF), the EU and many economists are optimistic about. The last tax increase should reassure the financial markets, but not cause panic in society. Earlier in the month the French government announced increased taxes on business and the rich worth 3.7 billion euros to help fill the deficit in the pension system. Paris still hopes to collect 1 billion in 2011 from the new bank tax.
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The G-20 does not give the desired impetus to investors in Asian trade today, it is felt by most of the shares in the region reported a decline. After meeting the most developed economies, held in Canada this weekend, was circulated communique, which gives a greater grace period for banks to increase their capital and liquidity and which promises to strike a balance between fiscal consolidation (reducing the deficit ) and the ongoing measures to stimulate the fragile economic recovery. Meanwhile, one of the biggest players in the forex market – John Taylor, who runs the biggest currency hedge fund FX Concepts LLC stated that “we are very scared some owners euro. Taylor predicted with great accuracy the decline in the single European currency had two months, said he hoped the depreciation of the euro should not last longer than August. Asia-Pacific MSCI Asia Pacific Index closed with a fall of 0.1 percent. Nikkei fell 0.45% (due mainly to the strengthening of the yen forex market that Japanese exports more expensive), Hang Senga rose by 0.49%, Shanghai Composite fell by 0.58 percent, while South Korean Kospi index rose by 0.13 percent, says Finance.news.bg . Before the official start of trading in Wall Street index S & P 500 reported a decrease of 0.1%. European index futures 600 Euro Stoxx went up after last week they reported the first index to decline last month. FTAE100 futures rose by 0.6%, the DAX by 0.5% and 0.9% CAC40.
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