Entries in European Union (11)


Bank of Cyprus Depositors Could Lose More Money Than Expected

Hemera/Thinkstock(NICOSIA, Cyprus) -- Wealthy depositors in the Bank of Cyprus could lose even more of their savings than initially expected.

According to BBC News, depositors with over 100,000 euros could lose as much as 60 percent of their money in order to pay for the bailout.

According to a statement from the bank, accounts that are over the 100,000 euro threshold will have 37.5 percent of their money converted into bank shares. Additionally, depositors could lose up to 22.5 percent more, depending on what experts deem necessary to support the bank's reserves.

The remaining 40 percent would continue to accrue interest, however the interest would only be paid if the bank "performs well," says BBC News.

The BBC report also states that depositors at Laiki -- Cyprus' second largest bank -- could face even larger losses, though no details have yet been released. Laiki is expected to eventually be absorbed by the Bank of Cyprus.

European and Cypriot government leaders reached a bailout deal this past week that averted a bank collapse. The $13 billion bailout calls for shrinking the banking system.

Banks in Cyprus reopened on Thursday with strict limits on transactions on withdrawals and a ban on cashing checks. Long lines of citizens waited to access their money on Thursday, but by Friday the lines were significantly shorter.

Copyright 2013 ABC News Radio


Nobel Prize Winners: Eurozone Award Controversy

iStockphoto/Thinkstock(NEW YORK) -- Two Americans were awarded the Nobel Memorial Prize in Economic Sciences on Monday, each earning about $1.2 million.

Alvin Roth of the Harvard Business School and Lloyd Shapley, professor emeritus at the University of California, Los Angeles, were awarded for “the theory of stable allocations and the practice of market design.”

Monday’s award was the last of the 2012 Nobel awards announced.

On Friday, the 27-nation European Union received the Nobel Peace prize for six decades of contributions “to the advancement of peace and reconciliation, democracy and human rights in Europe.”

The $1.2 million, or 930,000 euros, awarded prize comes as the union is currently facing "grave economic difficulties and considerable social unrest," according to the Norwegian Nobel Committee.

Unfortunately, the prize money is a drop in the bucket for Europe’s indebted nations like Greece, Spain and Portugal.

The award announcement precedes an EU Summit scheduled for Oct. 18-19, by which time a deal may be reached detailing austerity measures for Greece, which is still working out the terms of a $224 billion (173 billion euros) bailout package.

What will the EU, which is reportedly going to split the prize money, do with $1.2 million?

Past winners, including President Barack Obama from 2009, have donated the money to charities.

When asked what the EU should do with the prize money, Guy LeBas, chief fixed income strategist with the brokerage, Janney Capital Markets, said “all tongue firmly in cheek” that the EU may want to apply the money toward improving its economy, such as building a better quantitative model for bank stress tests, which only failed 9 of 91 European banks tested under eurozone regulators in July.

LeBas said the EU may be better off taking analysts from credit ratings firms Moody’s, S&P and Fitch “out to a five star dinner in Paris and lobby against downgrades.”  Otherwise, the EU could enlist the help of former German chancellor, Helmut Kohl, who oversaw his country’s reunification in the 90s, and former French president, Francois Mitterrand, “as a consultant team to get other EU leaders on the same page with one another.”

Peter Morici, professor at University of Maryland’s Robert H. Smith School of Business, suggested the EU, “donate it for food relief to those struggling in Greece, Portugal and Spain.”

Martin Baily, senior fellow in the Brookings Institution’s Economic Studies Program said he would buy a copy of Ron Chernow’s biography, Alexander Hamilton for all policymakers in Europe, perhaps with the section on Hamilton’s decision to assume the debts of the states after the revolution underlined.

“Strongly opposed by many, including Madison and Jefferson, Hamilton was able to work out a deal that created federal debt and reserved important taxing power to the federal government.  This policy saved the union,” Baily continued.

Copyright 2012 ABC News Radio


Bernanke Says Europe Needs Its Own Fed

Chip Somodevilla/Getty Images(WASHINGTON) -- Federal Reserve Chairman Ben Bernanke says that a central economic organization in Europe would help solve some of that continent’s economic crises.

“If Europe had a single fiscal authority, that would put them in a much closer situation relative to the United States,” Bernanke said Tuesday. “That would probably address many of the concerns, many of the problems that they had.”

European leaders promised this summer the creation of such an organization, but even optimistic outlooks say its creation could take months or years. Even then, critics fear that like many European Union organizations it may not have the teeth to police its member states.

Speaking during a townhall to public educators in Washington, D.C., Bernanke admitted “getting to that point is very difficult.”

“You have 17 different countries,” he said. “Each set of taxpayers want to make sure that their own country is being fairly treated.”

Turning his attention to the future, the Fed chairman also said newer regulatory measures including the Dodd-Frank Act and the Basel, Switzerland, accords were needed to prevent crises over the horizon.

The Dodd-Frank bill imposed new financial regulations on the nation’s financial services industry intended to prevent another massive bailout. The Basel Accords are an international agreement on standardized risk  based capital requirements for banks.

Bernanke credited Dodd-Frank with providing shared infrastructure across U.S. government agencies to “to take steps to provide a warning” against possible downturns.

At the international scale, Bernanke extolled the Basel accords for mandating increased reserve capital requirements across the largest banks. The measure, he said, was designed to make the financial system “as resilient as possible” by giving banks a larger cushion with which to sustain losses.

On Capitol Hill Tuesday, some lawmakers are saying Basel didn’t go far enough. Bloomberg News reports Sens. David Vitter, R-La., and Sherrod Brown D-Ohio, have asked the Fed to implement a surcharge with Basel, “significant enough to change the incentives for the largest banks.”

Copyright 2012 ABC News Radio


Greece Seeks at Least Two-Year Extension on Bailout 

iStockphoto/Thinkstock(NEW YORK) -- A policy document drafted by Greece's governing coalition says the country will seek at least a two-year extension from its creditors for the bailout program, Bloomberg News reports.

A document received in an email from the Greek government on Saturday shows that New Democracy, Pasok and the Democratic Left agree to eliminate plans to cut 150,000 public-sector jobs. It also included proposals to reduce sales tax for bars, restaurants, cafes and the agricultural industry and raise the income tax limit, Bloomberg says.

The New Democracy party won the nation's general election on June 17 on promises to renegotiate parts of the $163 billion bailout from the European Union and International Monetary Fund and keep Greece in the euro. Pasok and the Democratic Left then joined the winning party to form the new government coalition.

Copyright 2012 ABC News Radio


Iceland Prime Minister Says Nation Will Adopt Euro or Other Currency

iStockphoto/Thinkstock(REYKJAVIK, Iceland) -- Iceland Prime Minister Johanna Sigurdardottir said on Saturday that the nation will make a decision on whether or not to join the European Union and adopt the euro or drop the krona and adopt another currency, Bloomberg News reports.

Iceland began discussing the possibility of joining the EU in July 2010 and will most likely vote to decide early next year.

A Capacent Gallup poll in February revealed that around a quarter of Iceland's voters support joining the EU and a little over half oppose it.

Copyright 2012 ABC News Radio


Oil Prices Hit Nine-Month High

Comstock Images/Thinkstock(NEW YORK) -- Oil prices have risen following Sunday’s announcement by the Iranian oil ministry of a halt in oil exports to Britain and France in response to the European Union’s sanctions on the nation in January.

Oil prices hit a nine-month high reaching $105 a barrel and could increase further if Iran proceeds with its threat to halt oil exports to other European nations. Gas prices have increased to 18 cents a gallon in the past month.

"The increase in price is a direct result of European importers of Iranian oil looking round to find alternative sources," said Professor Paul Stevens from Chatham House, reports BBC.

However, the increase in price is also attributed in part to an improvement in the economies of China and the United States.

Copyright 2012 ABC News Radio


Obama to Meet with EU Leaders at the White House

Comstock/Thinkstock(WASHINGTON) -- As the European debt crisis continues to escalate, President Obama will meet with leaders of the European Union at the White House on Monday.

In a summit Wednesday morning, the president will meet with European Council President Herman Van Rompuy, European Commission President José Manuel Barroso, and High Representative Catherine Ashton.

According to the White House, Obama looks forward to discussing “a broad range of issues of mutual concern, including the global economy; our efforts to strengthen economic ties and growth; our joint work to support democracy and prosperity in the European neighborhood, across the Middle East and North Africa, and in other regions.”

In the afternoon, the president will host a private lunch with the leaders before they deliver statements to the press.

Copyright 2011 ABC News Radio


Eurozone Leaders to Hold Emergency Summit for Greek Bailout

Comstock Images/Thinkstock(BRUSSELS, Belgium) -- After months of debate, European leaders plan to hold an emergency meeting July 21 in an effort to reach an agreement concerning financially unstable Greece and the possibility a second international bailout. The leaders also hope to find a more extensive resolution to the debt crisis spreading throughout other Eurozone countries.

Herman Van Rompuy, European council leader, said EU leaders will meet in Brussels to address "the financial stability of the Euro area as a whole and the future financing of the Greek programme," according to the Financial Times.

U.S. stocks have seen losses in recent weeks over the mounting financial troubles in Europe.  One European diplomat indicated to Financial Times an awareness of the impact these troubles have on the global marketplace.

"There are times in history when it really matters. This is one of those times," they said. "The people working on a comprehensive package feel the weight of their responsibility and know that the world's eyes are on them."

Copyright 2011 ABC News Radio


S&P Gives Greece Lowest Credit Rating

Comstock/Thinkstock(NEW YORK) -- On Monday, Standard & Poor’s lowered Greece’s credit rating from B to CCC.

The downgrade makes Greece the lowest-rated country in the world.  S&P said they expect Greece will default on the $160 billion (110 billion euro) bailout from the European Union and International Monetary Fund in 2010.

The BBC reports that the Greek Ministry of Finance said, "The decision ignores the intense consultations taking place currently between the same institutions and the IMF aimed at designing a viable solution that will cover the financing needs of Greece in the coming years."

The European Union is considering restructuring Greece’s debt despite Greece raising taxes and cutting spending in order to avoid defaulting.

Copyright 2011 ABC News Radio´╗┐


Eurozone Approves $113 Billion Bailout for Ireland

Photo Courtesy - PETER MUHLY/AFP/Getty Images(BRUSSELS, Belgium) -- The European Union on Sunday approved an 85 billion euro or $113 billion dollar deal to help stave off an economic meltdown for Ireland.  The money will come from the International Monetary Fund, the 16 nations within the Eurozone and the European Commission. 

Ireland will be allowed to take money from its pension funds to make up its part of the EU commitment.  That had been against Eurozone rules. The EU has also agreed to set up a system by which a country deemed insolvent can restructure its debt. 

Ireland will have up to seven and a half years to pay back its loans -- longer than the three years allowed to Greece in its bailout deal arranged last May.

Copyright 2010 ABC News Radio

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