New York. stock trade .- Europe must aim for full-blown unity which would see monetary and political union entwined with a currency union rivaling the United States, the U.K. and Japan, analysts told CNBC Wednesday. Hans Redeker, Global Head of Foreign Exchange Strategy at Morgan Stanley told CNBC: “We need to aim for a united states of Europe.Then we would get a currency union like that of the States, the U.K. and Japan, it’s essential, otherwise this [bond-buying] plan will not gain credibility.”
He added that Mario Draghi, the European Central Bank (ECB) President who unveiled his bond-buying plan earlier this month, had understood the problem that Europe faced and that he had “needed to take this step”.
It was necessary to create a homogeneous bond market, he said.
The ECB program - known as Outright Monetary Transactions – would see the ECB buy up unlimited amounts of short-term bonds of a struggling country.
Some analysts considered it controversial. Critics have argued that the plan amounts to delaying a full solution to the euro zone debt crisis once again, and say it does not help in bringing about much-needed structural changes in certain euro zone countries.
Bob Janjuah, strategist at Nomura, said the plan was Draghi’s attempt to “further his own political agenda of a federal Europe” claiming the ECB was “attempting to orchestrate the grossest misallocation and mispricing of capital in the history of mankind.” Redeker admitted that the creation of a "United States" solution would be an uphill struggle because of the changes required to individual countries' constitutions. ... Continue to read.
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