The FINANCIAL — According to EU business, EU leaders on March 15 called on banks to help stabilise nerve-wracked financial markets whilst also sounding the alarm about the euro's record-breaking gains.
"We would like to invite financial institutions to help reduce the instability on financial markets within their limits," Slovenian Prime Minister Janez Jansa told reporters after chairing a summit of EU leaders.
Global financial markets have been extremely volatile amid concerns that tight credit conditions are threatening some finance houses, encouraging investors to seek safety in the the euro, oil and gold and other commodities.
Adding to the market drama, stocks plunged March 15 after it emerged that US investment bank Bear Stearns was getting emergency funding from rival JPMorgan Chase in coordination with the Federal Reserve Bank of New York.
"We have a great deal of uncertainty and turbulence in the financial world," British Prime Minister Gordon Brown said. "The important thing is to steer the path of stability."
European Commission chief Jose Manuel Barroso said that "transparency and enhanced cooperation between the regulators and supervisors, both at the European and international level, are crucial elements" for restoring calm.
French President Nicolas Sarkozy said EU leaders voiced concern about the euro's record-breaking run, which lifted the shared European currency to a new high just shy of 1.57 dollars on March 15.
The French leader said at the end of the summit that it "would have been inconceivable" for the leaders not to be concerned.
In written conclusions to the meeting, EU leaders said that sharp swings in exchange rates "are undesirable for economic growth" and that "in the present circumstances we are concerned about the excessive exchange rate move."
Barroso said "Europe takes a clear and unified position with regards to market uncertainties and with regard to undesirable volatility and disorderly movements in exchange rates."
"Thanks to the fact that we have a stable currency, the European Central Bank has been responding to the turbulence through timely provision of liquidity," he added.
"This is evidence that the European Central Bank will do what is necessary to secure stability."
Despite the frenzied markets, EU leaders were confident about their economic outlook, saying in the written conclusions that "the fundamentals of the European Union economy remain sound."
However, they were less optimistic about other economies and were in particular downbeat about the United States, Europe's biggest trade partner.
"There has been a deteriorating global economic outlook following the slowdown in activity in the United States," Brown said.
Such concerns about the US economy helped lift the euro to fresh highs against the dollar on Friday and propelled gold to another record above 1,000 dollars per ounce.
The European single currency hit 1.5688 dollars in mid-afternoon trade, which beat the prior record of 1.5651 set in earlier Asian deals on March 15.
On the London Bullion Market, the price of gold was 1,005.68 dollars, topping the previous high of 1,000.45 dollars that was set on March 14.
European Council, 13-14 March 2008
Text and Picture Copyright 2008 AFP. All other Copyright 2008 EUbusiness Ltd. All rights reserved. This material is intended solely for personal use. Any other reproduction, publication or redistribution of this material without the written agreement of the copyright owner is strictly forbidden and any breach of copyright will be considered actionable.
Discussion about this post