The International Monetary Fund (IMF) will give the global financial order stability. That is the official order. However, these days the IMF economists sometimes give the impression that she wanted to add fuel to the fire.
A few days before the vote of British publications about the whereabouts of the country in the European Union, the Organization a dramatic report, which should deter voters probably to vote against the discharge. When not sheared to the arguments of the IMF and voted for the Proposed referendum on United Kingdom membership of the European Union, made the horror scenario of economists for additional uncertainty.
Well proves the IMF in Italy a very special timing. Situated in the largest banking crisis in years, the IMF experts publish an assessment of the country. And containing an explosive force, which could lead to shocks throughout Europe. Because of the testimony that the IMF the government issues to Matteo Renzi, stating that Italy currently represents the greatest risk to Europe and all political statements, according to which it is not a crisis, are untrustworthy. Italy stand before “monumental challenges”, it says bluntly.
Italy’s banking sector is the systemic risk for Europe
The expert analysis leads to the conclusion that the banking crisis actually can be solved only by a fraction of the recently launched European banking directive. Worse, Italy will be there probably dependent on the assistance of the European partners because of their own economic weakness. At least, the IMF expects that the fourth largest economy in Europe will have returned to its pre-crisis level of 2007 until the year 2025th
“Italy is then two lost decades behind them, in which the partners of the Euro-zone between will be equal to 20 and 25 percent, “the IMF authors write Rishi Goyal. “The growth is too low to solve the problems in the financial sector. At the same shaky balance sheets will be a source of constant uncertainty.” And not only the company balance sheets pose the Monetary Fund to immense risks.
The high national debt of 135 percent of economic output makes the country vulnerable to shocks, noting the IMF experts. In particular, the banking sector is a systemic risk for Europe. At least 360 billion euros, the problem loans of UniCredit, Monte dei Paschi & amp sum; Co. On average 18 percent of the total loan portfolio are non-performing, only in Greek houses, the rate is even higher. The experts agree that the institutions must be urgently recapitalised.
€ 31 billion of savings at stake
But there the problem begins. The new Brussels banking directive allows such assistance only if first the private owners and creditors of banks have emerged for eight percent of commitments. This is to prevent that always only taxpayers’ money for the rescue of banks is expended.
However, many private savers have converted their money on the current account because of low interest rates in bank bonds. 38 percent of bank bonds are held by small savers. In strict application of the rules would have to be bled, making the IMF clearly in his analysis. These private customers would lose at least 31 billion euros of savings. That is not politically feasible, be stated stability guardians. “Must be with this problem handled carefully,” write the IMF analysts.
even Finance Minister Wolfgang Schäuble (CDU), who has previously insisted on a strict application of the banking Directive, revealed earlier this week on this point yielding. We must find a way, as the small investors can be spared, he said on the sidelines of the meeting of finance ministers of the euro zone.
The reluctance has good reasons , Already, the EU pessimism in Italy is strong. In the latest polls, the anti-establishment movement is five-star level with the ruling party of Matteo Renzi. According to a survey by Ipsos is no nation wants Europe so much a vote on membership of the EU as the Italians. Almost half would thereby vote for an exit. “The banking crisis is just the tip of the iceberg. The political problems are just as serious for the continent,” said Alastair Newton, strategist at political analysis House Alavan.
anemic growth and high debt
How serious the problems, also expressions of French Finance Minister Michel Sapin made clear. You’ll find a pan-European and solidary solution with Italy. His words are not altruistic. French banks are the most entrenched in Italy with more than 250 billion euros.
Italy’s so dangerous for Europe because it is one of the largest economies, the not so simple can be like lugging Greece. The boot state is among the EU countries with the highest debt, but the least work inclination. The employment rate of Italian women between 25 and 54 years is just two-thirds. In this country, more than 80 percent of women work part-time in this age group at least.
At the same time the economy is not competitive. This is especially apparent in the export statistics. Italy’s share of global trade has declined steadily in recent years. One reason is the low level of investment, which led to a stagnation in productivity. Another reason is the euro.
So the Italians were against joining the euro only thanks to their soft currency economically viable and able to sell their cars or machines in the world markets. In fact, the Italian currency lost against the Deutsche Mark between 1971 and the Euro-start more than 80 percent. Since the introduction of the euro is no longer possible. But Italy has mentally not yet been adopted by the old habits and must atone with anemic growth and high debt.
the IMF does not belong to the long single admonishers. Even the economists at Deutsche Bank prepares Italy worried. The overlapping risks of weak economic growth, political uncertainties and a mountain of bad loans could clenched trigger a major shock, fear.
“The EU is in its biggest existential crisis in six decades,” write the German Bank experts. If you will not come across fast enough, Europe’s economic recovery could slow down sharply. Then, the political viability is threatened. The top priority is the resolution of the banking problems. Chief Economist David Folkerts-Landau had “Sunday World” demanded in an interview with, for banks to suspend the EU-settlement policy in the short term in order to prevent a collapse of the financial sector.
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