The International Monetary Fund has urged European governments to undertake a rapid recapitalisation of its financial sector, to staunch a crisis that is slowing economic growth.
The fund said it stood ready to join the eurozone’s rescue fund in buying bonds from distressed governments to help restore market confidence in a sector that is heavily exposed to the debt of countries like Greece and Italy.
Olli Rehn, European commissioner for economic affairs, confirmed to the Financial Times earlier this week that European Union finance ministers are examining ways of co-ordinating recapitalisations of financial institutions to shore up the region’s banks.
Europe needs between 100 billion and 200 billion euros to recapitalize its banks to win back investor confidence and should put in place a comprehensive plan across the continent, the International Monetary Fund’s European Department Director Antonio Borges said on Wednesday.
“We are talking about figures of between 100 and 200 billion euros, which in our view is very, very small compared to the size of the European capital markets and compared to the resources of the new, enhanced EFSF,” Borges told Reuters during a visit to Brussels, referring to Europe’s bailout fund.
(Reuters) – Private-sector employers added 91,000 jobs in September, above economists’ expectations, a report by a payrolls processor showed on Wednesday.
Economists surveyed by Reuters had forecast the ADP National Employment Report would show a gain of 75,000 jobs.
August private payrolls were revised down to an increase of 89,000 from the previously reported 91,000.
Moody’s lowered Italy’s rating three levels to A2 from Aa2, with a negative outlook, the New York-based company said in a statement. The action comes after Standard & Poor’s downgraded Italy on September 20 for the first time in five years. Italy was last cut by Moody’s in May 1993.
Italy gave final approval last month to a €54bn austerity plan aimed at balancing the budget in 2013 that convinced the European Central Bank (ECB) to buy the nation’s bonds. While the purchases initially brought down bond yields by about 100 basis points, Italy’s borrowing costs remain near record highs because of euro-area debt crisis contagion.