Yesterday the International Monetary Fund urged the European Union to set up an agency that would be responsible for either closing or salvaging troubled banks across the continent as part of an effort to reduce the bad debt that is currently impeding Europe’s economic recovery. The IMF move is hardly surprising as it would give internatoinalist bureaucracies an increased say in affairs that are wholly out of their league. It should be remembered that areas like these are in the domain of national affairs or (much rather) of business without any administrative intervention at all. In their Global Financial Stability Report, the IMF said that investor’s faith in the euro-area banks balance sheets must be restored, otherwise the euro area risks entering into a lengthy, chronic phase of low growth. That low growth is, in fact, caused and prolonged by all this government intervention and Keynesian policies appears to have slipped their attention once more.
Today data might show that industrial output in France and Italy has apparently risen, adding to signs that the euro-area economy is recovering. The EUR was close to a one-month high versus the GBP before today’s meeting of the Bank of England. It is widely expected that interest rates will remain unchanged. The EUR/GBP was at 0.8470 and the GBP/USD traded at 1.5939.