Germany, France, Italy and Spain have agreed measures to boost growth expected to achieve growth of 1% of the currency area’s economic output through a 130 Billion Euro Growth Fund. The growth package is expected to comprise several measures already in the system, such as, to boost spending on infrastructure and other investments, backed by European taxpayer money.
The concern being no new money is expected to be involved, the agreement will end as more symbolic than physical. The money meantioned has already been agreed and is in the system – so it will not be a massive injection of cash to rescue struggling European economies.
Spanish banks
Friday’s talks had been expected to involve a formal Spanish request for Eurozone financial assistance. However, no mention of a request was made in the press conference following the talks.
The Spanish, Italian and French leaders have advocated a banking union for the Eurozone, likely to entail much stronger central regulation and supervision of European banks, as well as the creation of a common Europe-wide deposit guarantee scheme.
Spanish and Greek banks have experienced significant withdrawals of deposits in recent months, on fears that they may be insolvent, or that their home nations may exit the euro.
All the banks in Eurozone peripheral economies, including Italy, have found it very hard to borrow from other banks and money managers since last autumn, forcing the European Central Bank to provide them with an unprecedented trillion euros of three-year emergency loans over the New Year.
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