Germany's largest bank Deutsche Bank loan (Deutsche Bank) Chief Economist Thomas Mayer on Thursday (March 24) noted that, even if the European Union (EU) leaders on Conventions of the euro (Euro Pact), agreeing, the euro also lack a solid foundation, and long-term risks.
the EU leaders Thursday and Friday (March 25) at the Brussels Summit, which are currently the focus of the market, investors hope leaders can use the integrity of the chance to introduce effective crisis response mechanisms (that is, EUR Convention), to draw a full stop for European sovereign debt crisis. However, Deutsche Bank's economists are not so optimistic.
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Mayer points out: "even if EU leaders reached an agreement, there is also a question of the nature of the agreement, that is, it can only deal with future debt crises. If the market is willing to further funding for debtor countries, accumulated debt in the past how to develop extremely unclear. "
although Mayer European stabilisation mechanism (ESM) called" real progress ", he also warned that assistance mechanism of the Convention is still there is a huge flaw.
in Mayer's view, European stability and Growth Pact (Stability and Growth Pact) or the Convention were unable to deal with the crisis of the euro. At the same time, broad market expectations of expansion of the European financial stabilisation mechanism (EFSF) scale problem was also seen in the here and now is useless.
he pointed out: "why do need to expand the scale of assistance mechanisms of this? Even if Portugal is very likely to seek assistance, which also has sufficient funds. At the same time, now almost no one expected Spain to seek assistance. "
Deutsche Bank: debt restructuring is the King of crisis resolution
Mayer further pointed out that currently around Greece, and Ireland, and even Portugal's debt crisis could be resolved through debt restructuring to only. This view in line with some analysts earlier this year.
, he explained: "the EFSF should be more flexible, can be considered in Greece and among the EFSF implementation of debt swaps and writedowns on Greece debt 30% per cent. Such a way as to help indebted eurozone Member States. "
Mayer added:" the current mechanism is only put off the persistent problems. "
therefore, in his view, the EU leaders postpone longer the time to solve the problem, there will be an increasing number of countries receiving assistance, at the same time, such as Germany and other countries providing assistance will also face domestic rising against the euro sentiment.
Mayer warning: "the best example is Finland, the crisis the Orthodox Finland party (True Finns party) and other political parties on Euro-scepticism, while Portugal and other countries of the domestic population also began to oppose all the austerity measures. "
he said that EU policymakers spend longer time the real solution to the debt crisis (for example, begin to implement debt restructuring), then the euro will be more dangerous, at least is so long.
Mayer called for the establishment of an independent body to support the European Central Bank (ECB), supervision of eurozone Member States, and have the ability to provide financial help, and the final reorganization of the insolvent Member States debt.
he reiterates: "only through this mechanism, we can get rid of the new euro aid the biggest flaw of the Convention. "
00:11 ', EUR/USD 1.4188/91.
