Cyprus, Hungary and global monetary accommodation
Just as the global economy looked as if it was emerging from the Great Recession and investor confidence was returning, things turned negative. Yet again it has been a shock from the eurozone – this time the ill-executed bailout of Cyprus – that has unnerved international investors. While it is early days and the implications for global markets are hard to evaluate, it is nonetheless clear that investors have been reminded that this crisis is not over yet and in particular that the situation in the eurozone remains the biggest risk to global recovery and global financial stability. It is difficult to be impressed by the EU policymakers’ handling of the euro crisis so investors are likely to have lost some confidence as a result of the Cyprus debacle. So it is clear that we can no longer assume that it is just ‘risk on’ forever and investors are well aware of this.
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Danske Bank