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Euro summit delivers a comprehensive package but leaves plenty of gaps • European Central Bank (ECB) cut its policy rate by 25 bps to 1% and offered a lot of support to Euro area banks but did not announce any large scale bond purchase program. • EU leaders committed to a new "fiscal compact" for the euro zone. Draft showed that the euro zone agreed to bring forward the launch of its permanent bailout fund, European Stability Mechanism (ESM), to July 2012. Both the temporary bailout fund, the EFSF (European Financial Stability Facility) and the ESM, could run in parallel for a year from mid-2012. The maximum lending capacity of the ESM (€500 bn) might not be diminished by the amount of money already spent by the EFSF, as was the initial plan. • The political changes should be supportive of the necessary reform process, but none of this will be sufficient to overcome the deep-rooted sovereign and financial crisis in the euro area. General Government Debt and Balances (% of GDP), 2010

Note: CAPB – Cyclically Adjusted Primary Balance Confidential

Source : Eurostat, IMF WEO , RMF Research

Slide 6

india _global market  

macro economic environment

india _global market  

macro economic environment

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