Stock exchange news. Financial gap is growing and can soon drag world economy in, whereas the management of European countries is not the master of the situation any more. Similar idea has recently been announced by one of the most well-known financial tycoons, George Soros. However, unlike numerous pessimistic comments of his colleagues, financial “guru” has given some advice on how to survive the “crisis withdrawal”. In his opinion, everything that is currently suggested at the meetings of Eurozone management does not have enough determination and foresight to radically change the sorry state of the region.
In his blog Soros encourages the European Union management to regain control over the economic situation. In his opinion, a number of consistent transformations are to be implemented to achieve this.
The first and foremost is to make an agreement between EU member countries to create a common Treasury, which will unite all European flow of funds. Further, large banks are to delegate their authority to European Central Bank, which is obliged to provide corresponding warranties to them. Another important decision is to approach “problematic” countries with understanding and provide them with an opportunity for debt refunding at minimal interest rate.
From practical point of view, creating a common Treasury certainly is time-consuming. Therefore, in order not to lose precious time, an intergovernmental structure, which will enable European Stabilization Fund to have direct contact with European Central Bank, is to be created in the nearest future because at this point Stabilization Fund is a mere “money-bag”, and every state decides how to spend money on its own. New intergovernmental structure will enable Stabilization Fund to take part in European banks’ recapitalization and deposit warranties. At the same time, the states will maintain their sovereignty and form budget policy on their own.
As a result of reforms the percentage of borrowed capital, which, according to Mr. Soros, is the root of “crisis evil”, will decline.
In order to reduce tension in the sphere of state obligations, Central Bank will have to lower the discount rate. The measures of stimulating “problematic” countries to attract means by special note issues will be taken further, whereas banks will have stimuli to purchase them.
Soros believes that with the help of these complex measures markets will become certain that Europe has finally chosen “the right track” to break the deadlock. This will provide some head start, which will enable to decide on long-term plans on recovery.
Soros himself supposes that his idea will not be shared by the majority of banks, for they are unlikely to want to become Central Bank’s wards. It is only public opinion that can become a key factor in the current situation and probably move the issue from “the dead point”.
These measures, suggested by Soros, are to bring positive impact, for needless disagreements will eliminate, and important decisions will be taken on spot. However, it should be remembered that for a controlling body alone it is harder to effect control and foresee possible risks. One way or another, European financial institutes are to be thoroughly monitored; otherwise, another wave of crisis will stave economic bits to splinters.
Analytics of Forex Academy Department of Volume Analysis and Masterforex-V Futures Trade and Stock Exchange admit that dollar index is currently towards last week’s growth, having reached the point of 79.020:
