Bankers and Policymakers warn about the European Crisis
Bankers and policymakers issued a warning statement on Saturday, saying that Europe’s crisis is not over and market should not think it the same way. Some leading international bankers and finance ministers said today that although European currency is becoming stronger and stabilized, still it will take years to overcome from crisis. This report came out after a meeting of leading government officials, commercial bankers, central bankers and union officials.
According to these bankers and officials, unemployment rate in Europe will fall only to 11.7% from 11.8% in the year. In the meantime, growth is also stagnant and real wages are also not increasing in many countries like France and Sweden. Improvements in real wages are considered essential for reforming the labor markets of any country. So thinking that crisis is over will be very dangerous because it will undermine the crisis insight that should be in the minds of companies, unions, people and economies.
Participants of the meeting further added that mood of meeting was however, a little bit relaxed from the mood that was 12 months ago, when everyone was thinking only about preserving a single currency from breaking up.
Mario Draghi, the President of European Central Bank, leaved the meeting before completion for going to home while Olli Rehn, EU Economic and Monetary Affairs Commissioner, did not attend the meeting.
Christine Lagarde, International Monetary Fund Managing Director, said that it was a challenge for U.S. and Japan to maintain the level of European currency on a stable point and to put their public finances on an appropriate pace without crushing their own growth. Momentum of economic reform in Europe was breaking very steadily during last year. Thankfully, that condition does not exist anymore.
A senior commercial banker, who declined to be identified, said that people who are thinking that European crisis is now over, have come far away from the reality.
Before these statements, European Central Bank announced a more-than-expected repayment of the three-year-crisis loan by some euro zone banks. Banks are expected to pay $130 billion in repayment to ECB within only one year, while the loans were for three-year period. After this breaking news, the global markets thought that European crisis has been broken and stability is coming ahead. Large investments were made during the day in stock markets and global stock markets reported a record profit on that day.