herald

Saturday 18 August 2018

Six weeks to save the euro, EU is warned

EUROPEAN Governments were moving to bolster European banks today after a warning that they have just six weeks to save the euro from collapse.

British chancellor George Osborne sharply criticised eurozone leaders for failing to get a grip on their towering debts.

He set a deadline of six weeks -- when leaders of the G20 group of leading countries meet for crunch talks in France.



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"Patience is running out in the international community. There is a sense from across the leading lights of the eurozone that time is running out for them. The eurozone has six weeks to resolve this crisis," he said.

One political commentator said last night it could be six days, not six weeks, if the Greek government defaulted on debt.

Yesterday, European markets steadied after a late rally sparked by hopes of action from European authorities to help struggling banks and ease the debt crisis.

Shares had fallen earlier after renewed talk of a possible Greek default, as a member of the European Central Bank governing council acknowledged the possibility of a Greek default for the first time.

"It is one of the scenarios. I'm not saying that Greece will not go bankrupt," Dutch central bank governor Klass Knot said in a newspaper interview.

"All efforts are aimed at preventing this, but I am now less certain in excluding a bankruptcy than I was a few months ago." European governments were expected to move, possibly this weekend, to provide fresh support for European banks.

Up to 20 European banks need fresh funds, according to the French financial authorities.

Meanwhile, Ireland is set to pay just 3pc for its next installment of 15-year bailout loans -- half of what Ireland currently pays.



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It came after the EU said it had borrowed €4bn on the bond markets at 3pc interest and said it would lend the cash to Ireland and Portugal.

If Ireland borrows at 3pc, the €2bn loan will cost just €60m a year in interest payments, one of the lowest borrowing costs for any country.

mlavery@herald.ie

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