European Bank Protection Fund?

European Bank Protection Fund?

The French have suggested that a Europeanwide fund to support the banking sector would be in order.  Both the UK and Germany are reluctant also accept that it may be a necessity in the future.  

This follows pressure to raise capital adequacy on Eastern European Banks to improve protection their as well as arguments over EU member state Ireland’s stance of guaranteeing the capital of the top six Irish banks promoting and flood of capital out of the UK to Ireland.  This is seen as anti-competitive.  In addition, e have also seen a run on shares in Italian Bank giant UniCredit, which incidentally also owns Hypovereinsbank in Germany.

We expect greater coalition between European nations although we suspect both the UK and Germany will also fight it given that they are the two biggest financial centres in Europe and will want to protect their own international trade.

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