From the box of unpublished material
In 2016 Greece itself made little progress with politically difficult measures to overhaul its public finances, the country remains mired in crisis and in debt. At the heart of it all, from the IMF’s perspective, are concerns that the fund yielded to political pressure from European governments.
This prompted the inspectors to demand sharper protections against political interference in technical analysis by the fund. IMF chief Christine Lagarde said no, but critics see plenty to bolster their conviction that the fund’s strategy in Europe was different to its engagements in emerging markets.
In the Summer of 2016 Stress test results for Europe’s top banks came out and all eyes were on Italy’s embattled Banca Monte dei Paschi di Siena (BMPS) — the world’s oldest bank, who failed already the 2014 stress tests and had to carry out two capital increases for a total of 8 billion euros ($8.8 billion) but whose stock had fallen 84 percent over one year period.
But scandal-hit German lender Deutsche Bank was also the one looked at when the London-based European Banking Authority released its results. Following a series of scandals, difficulties for its investment bank in a low interest rate environment and the impact of a tough restructuring plan — investors are wary about the banking giant. It does, however, retain solid core capital ratios and — thanks to the support of the ECB — it should not lack liquidity in the short-term. Deutsche Bank chief executive John Cryan, when he he presented its second quarter results, said the bank’s financial status were “unjustified.
The EBA published stress test results in 2011 and 2014 (when 24 failed and had to boost capital) to measure the potential effect of an economic shock — but this time it was not saying whether the institution concerned has passed or failed.
“In 2016, no pass fail threshold has been included as the objective is to use the stress test as a supervisory tool,”
the authority said.
The weak economic environment persisting the banks needed to be yet more ambitious in the timing and intensity of their restructuring.
Spanish bankers enjoyed a tranquil summer having credit flowing easily through the system once again after years where households and small businesses struggled.
In August bank’s shortfall in purchasing bonds reflected the lure of long-dated debt in hedging liabilities, whilst Triple record for US stocks gave Asia bourses a lift, with a record close for all three US benchmarks outweighs batch of soft China data and Wall Street hitting records as oil surged.
In several West European countries were talks about introducing negative interest rates. Bavarian lender passed on costs of ECB policy to individuals and charged negative rates on large deposits.
The European Central Bank (ECB) argued that it may be forced to bolster its monetary stimulus programmes if governments fail to act to boost their economies, board member Benoit Coeure said in August
In September Vera Jourova, the European commissioner for justice, was launching a campaign to make sure that national regulators pursued Volkswagen over the “dieselgate” scandal.
Antonio Tajani and Janez Potocnik, who served, respectively, as the commissioners for industry and environment from 2010 to 2014, appeared before a European parliament committee investigating who knew what and when on dieselgate.
Both men were grilled on why the commission did not react more energetically to evidence that diesel cars were smashing through legal limits for emissions of dangerous nitrous oxides. Failure to get to grips with that broad problem, it is argued, meant that consumers were misled and that the VW cheating went unseen.
MEPs orchestrated the theatre of having Mr Potocnik appear at the same time precisely because he warned his then colleague, vigorously, of the need to get to the bottom of the problem. The two men even exchanged letters on the issue, something that was revealed by the FT last year.
In the event, it was former environment commissioner who cut the more contrite figure, saying that, “with hindsight, even if it was not part of my responsibilities one could argue that I should have been more determined.”
My Tajani, by contrast, was bullish. Europe was in the “vanguard” when it came to tougher car rules, he insisted.
While MEPs go over the past, other efforts to repair EU car regulation in the wake of dieselgate are in a slower gear. Major proposals made by the EU commission in January that would hand Brussels powers to oversee car testing are moving sluggishly through Council and Parliament.
Working out what went wrong is still no substitute for redressing the harm done to consumers – and making sure this kind of scandal never happens again.
In September at the G20 Summit in Hangzhou in China, the G20 leaders needed to change domestic rhetoric as well as policies, whilst the tide of globalisation was clearly starting to change and one could see a steady rise in protectionist measures.
Trump killing the TPP, Canberra had to seek new allies.
In November the former French president Nicolas Sarkozy called for a two-speed Europe – split between the eurozone and the rest – and giving the UK option of (re)joining a reformed EU. Sarko’s new EU would feature: an EU treasury and a European monetary fund for the eurozone and pared-down EU for the rest, with looser competition rules, a focus on trade and a five year wait for anyone claiming benefits.