Chillin' out till it needs to be funded
The Euro zone banks would anyway be involved in all ECB attempts in mopping up treasury bonds issuance from the myriad nationalbanks in the next phase and also Greek bonds were already being accepted as level collateral. These would be put as a result of hectic weekend parleys in history.
The EUR 500 bn extended by the Euro zone banks to the new crisis fund has magnetically drawn EUR 250 bn equivalent from IMF and includes only EUR 60 bn from the rest of the beleaguered European Commission or its own funds as it were. Also the US Administration and Bank of Japan were active thru the weekend in formalising this arrangement which would be now the “Nuclear deterrent” for hot money and those interested in shorting this market circuit.
The funds are now centrally located and earmarked for this specific purpose. In this,they also create a hope for national citizens within the Euro zone which like in Germany were otherwise holding their Govenments responsible for “meddling in others business” and “throwing away the baby with the bath water”in participating in the earlier EUR 110 bn bailout.
The G20 and its immediate next convenor South Korea was also quick in ratifying and applauding the international effort. However,what stays from last week is that there is not much difference in the boundaries between the Developed and the Emerging Markets or theG20 and the G5 in terms of international competitiveness or market attractiveness and credit rating agencies for one are still behind in catching up on the changes that have brought it about.