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Banks and bonds of Italy and Spain need to be protected, warns Soros

Saturday, October 1st 2011 - 05:30 UTC
Full article 3 comments
Soros called for a common EU Treasury, recapitalization of banks and protection for vulnerable states Soros called for a common EU Treasury, recapitalization of banks and protection for vulnerable states

Policymakers have lost control of the economic crisis and financial markets are forcing the world into a depression, George Soros said on Friday, urging Europe to create a common Treasury, recapitalize its banks and protect vulnerable states.

Soros, chairman of Soros Fund Management who made a fortune during the 1992 sterling crisis, said the most important task was to “erect safeguards against contagion from a possible Greek default”.

”Since a Euro zone treaty establishing a common Treasury would take a long time to conclude, in the interim the member states have to appeal to the ECB (European Central Bank) to fill the vacuum“ the financial expert wrote in an article for the Financial Times newspaper.

”Both the banks and bonds of countries such as Italy and Spain need to be protected ... To relieve the pressure on the government bonds of countries such as Italy, the ECB would lower its discount rate.“

Soros said the ECB could then encourage countries to finance themselves with Treasury bills bought by banks. Those banks could then at some stage rediscount the bills with the central bank, allowing countries to refinance for about one percent a year during the ”emergency period.“

”Neither the ECB nor the EFSF (European financial stabilization facility) would buy any more bonds in the market,“ he said.

He said the EFSF should be used to guarantee and recapitalize banks that would then have to maintain credit flows under guidance and monitoring from the ECB.

”These measures would allow Greece to default without causing a global meltdown,“ Soros said. ”That does mean that Greece would be forced in default ... How Greece fared would be up to the Greeks.”

However, he said only public demand for his plan would make it happen, given likely resistance from banks and national governments.

Categories: Economy, International.

Top Comments

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  • Fido Dido

    Let them fail!!! Soros is a scumbag.

    Oct 01st, 2011 - 06:30 am 0
  • Asdrúbal el Bello

    Hahaha. How much money Soros has invested in CDS on Italian and Spanish bonds? Of course, the european taxpayer will not pay the note. The banks writte off, Spain and Italy will sell their public enterprises, and Soros left a lot of money.

    Oct 02nd, 2011 - 10:20 am 0
  • geo

    Soros never knows “” s “” of speculation...

    Soros was loaded by secret hands “£” speculation at the begining
    of years ...

    Soros have been used as a “” puppet “” since those dates...

    do i continue .....!!

    Oct 02nd, 2011 - 10:32 am 0
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