Eurogroup Meeting Eyed
The euro rallied midway through the European morning, following comments from German CDU budget spokesman Barthle. He said that running the EFSF and the ESM in parallel is being discussed within the party. While investors reacted favourably to the comments, this has been suggested on many occasions in the past. Back in December, when the leveraging EFSF idea was losing ground, this idea was mentioned by ‘EU sources’. It would effectively create a much bigger firewall if it happened but there are of course many stumbling blocks to its implementation – increased guarantees and potential German constitutional court challenges to name but two. IMF Chief Lagarde also added support to the idea, when speaking at a conference in Berlin. There were few developments on the Greek bond swap but indications are that the details have yet to be finalized, despite further signs of progress. Over the weekend the IIF (Institute of International Finance) gave its most upbeat assessment yet of the current state of play, noting that the elements of an agreement are “coming into place”. It appears that terms have in fact been provisionally agreed between Greece and the IIF, but the plan is now being vetted by the EU/IMF.
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