• Sweden edition
 
Reinfeldt: danger not over for the euro

Reinfeldt: danger not over for the euro

Published: 27 Oct 2011 11:05 GMT+02:00
Updated: 27 Oct 2011 15:34 GMT+02:00

"There is a lot left to do," Reinfeldt said.

After extended negotiations that ended only 4am on Thursday morning the group of tired leaders from the eurozone countries announced that they had a deal.

French President Nicolas Sarkozy was first out to inform that the banks had agreed to a 50 percent debt reduction for Greece.

Sarkozy acknowledged that all details are not in place yet, a sentiment shared by his Swedish counterpart.

One of the issues Reinfeldt argued, which remained to be resolved is how the eurozone countries would go about boosting the war chest of crisis fund to €1,000 billion.

"Some steps have been taken and there are grounds for cautious optimism, but one must also note that there is much left to do," Fredrik Reinfeldt argued at a press conference in Stockholm.

He pointed out that the final document of the euro summit contained clear challenges to the countries affected by debt that they have a responsibility to clean up their economies.

The document furthermore includes projections on strengthening the emergency fund, the goal of reducing the Greek debt by 2020 and the recapitalization of banks.

Sweden's finance minister Anders Borg expressed "cautious optimism" over the deal while pointing out the demands on Swedish banks to improve capitalization.

"For the Swedish banks this means that they have such strong profitability, so that if they retain profits for several quarters they are at that level," Borg said.

Borg also commented on the planned strengthening of the rescue fund EFSF.

"This is a very powerful upgrade of EFSF. It is clear that there it is sufficient to go far," he said.

The settlement was earlier described as a "positive step forward" by Swedish economists.

Robert Bergqvist, chief economist at Swedish bank SEB is among those hailing the announcement early of the deal early Thursday morning after a tough night of negotiations.

"It's a step forward, but the content is not really surprising," he told the TT news agency, and is backed by other analysts.

At the end of overnight negotiations it emerged that the banks agreed to write down Greece's debt by half, and the emergency European Financial Stability Facility (EFSF) is to be strengthened up from the current €440 billion to 1000 billion.

At the same time Bergqvist warned of the effects of how quickly the new, stricter capital adequacy requirements for banks should be implemented.

"The schedule is a little too tough and could pose a threat to growth, which should be avoided," he said, although stressed that he understood the objectives.

Bergqvist underlined that it is now up to EU ocuntries to restore confidence in the market by establishing credibility in the decisions taken.

"If the politicians change the rules along the way investors will think again over whether they should lend to heavily indebted countries," he said.

The SEB economist concluded that there remained a number of problems for the EU countries to tackle.

"I am afraid that this we stand not at the end but at the beginning of a long and difficult process."

That euro area countries would agree on rescue package was expected and is positive, according to Swedbank's chief economist Cecilia Hermansson.

"But then there are many details that remain. A sufficient number of banks have to want to participate in this initiative and there are some details to work out," she said.

"This also applies to the support fund, including how to use the insurance component in order to increase their leverage in the fund and how to get funding from, for example, China and elsewhere."

The market's immediate reaction, as reflected in the Asian stock exchanges leading indices, was also no big leap of joy, but the indices did climb upwards.

TT/The Local/pvs (news@thelocal.se)

Don't miss...X
Left Right

Your comments about this article

09:06 October 27, 2011 by zircon
For State Finance, actually historical accountancy, doesn't do memory system.
09:26 October 27, 2011 by the fonz
Anybody who thinks this is the solution to this mess is gravely mistaken. These heavily indebted countries simply cannt produce enough to pay their way in the Euro. When they had their own currencies, they would fluctuate to aid the real value of their economies - that particular release valve is closed and the debt bubble keeps on growing and growing. Like everything in life - when the pressure gets too high - something has to give. And it will.

RIP Euro.
12:16 October 27, 2011 by Svensksmith
You can always trust a banker.
14:10 October 27, 2011 by skogsbo
each Euro nation has slightly different problems, so spend too much, other have too low taxes, some are just corrupt with people dodgying tax, unemployment or no production. A blanket solution won't work, each country needs to get grip and be responsible for itself, the safety blanket of the Euro will fall away soon if there don't. Northern Europe will survive, but the Latin countries, Ireland and Greece will turn into instant 3rd world nations.

Bankers aren't the problem, here corrupt/ tax dodging business men and lying / incompetant politicians when they fudged euro entry are cheifly responsible. Most of the problems were visible 5 years ago, they just take time to manifest themselve to the point where they can't be glossed over anymore.
14:49 October 27, 2011 by GLO
This is a planned failure, remember this time! Nothing has changed they will continue ......Ineptocracy (in-ep-toc'-ra-cy) - a system of government where the least capable to lead are elected by the least capable of producing, and where the members of society least likely to sustain themselves or succeed, are rewarded with goods and services paid for by the confiscated wealth of a diminishing number of producers
17:47 October 27, 2011 by Acero
Such valid points by the fonz (a name everyone loves) and skogsbo, but with some lines of pure stupidity.

"..but the Latin countries, Ireland and Greece will turn into instant 3rd world nations."

Greece has never been anythin BUT a 2nd world nation at the very best of times. Ireland, in a way is the cousin to Iceland...lots of good points but wont ever really (bless them) be a REAL economy.

It comes down to what the fonz said about the release valve of a currency defltion. Its what a country needs..and without it there will always be papering over of cracks. Italy, Ireland, Germany and belgium are all very different countries....but are all being told to speak the same language. Not gonna work in the longer term sadly but it was nice not changing money there for a while
05:59 October 30, 2011 by Ron Pavellas
Perhaps my eyes glazed over at critical places, but the effect on Sweden seems clear as mud. Having read other reports I know what others here know: the deal doesn't address the underlying problem. It's a "kick-the-can" ploy again. Where does the €1,000 billion fund come from? Government promises? Will Sweden throw money at this? It'll disappear. We wisely (or inadvertently) voted to stay out of the EMU, but will we be dragged in anyway just by being connected commercially with EMU members? Will an economist (not a politician) please explain?
Today's headlines
Dad jailed for assaulting his infant twin sons
Photo: Jessica Gow/TT

Dad jailed for assaulting his infant twin sons

A man in central Sweden was sentenced to prison for aggravated assault on Friday after doctors noticed that both his twin sons had sustained serious and unexplained injuries. READ  

Swedish city all set for six-hour workday trial
Clocking in. File photo: Shutterstock

Swedish city all set for six-hour workday trial

Officials finalized plans on Friday for the "Gothenburg guinea pigs" who will test out the six-hour workday, a move it's hoped will cut down on sick leave, boost efficiency, and ultimately save Sweden money. READ  

Armed royal guards caught drunk on the job
Photo: Gunnar Lundmark/TT

Armed royal guards caught drunk on the job

Three Swedish soldiers risk prison after they were found to be drunk while guarding Stockholm's Royal Palace. The men, who were all armed at the time, were charged on Friday. READ  

Stockholm
What do the Swedes do when summer's over?
Photo: Isabela Vrba

What do the Swedes do when summer's over?

The heatwave is well and truly over, the days are getting shorter, and winter is coming. With this in mind, The Local's Isabela Vrba chatted to ten Stockholmers about how they plan to tackle the autumn. READ  

Swedes spend fortune on nail polish trend
Photo: Bertil Ericson/TT

Swedes spend fortune on nail polish trend

Swedes are spending more than ever on makeup - and a growing chunk is going directly to their fingernails, new figures showed on Friday. READ  

Sweden mulls stripping paracetamol from shops
The pharmacy section of a grocery store. Photo: Fredrik Sandberg/TT

Sweden mulls stripping paracetamol from shops

After a drastic increase in the number of paracetamol poisonings in Sweden, authorities have said the drug should only be available in pharmacies. READ  

Listeria fears prompt meat recall in Sweden
File photo: Andreas Hagerman/Flickr

Listeria fears prompt meat recall in Sweden

After finding traces of listeria in ham sold in Sweden, food companies decided on Friday to recall several Danish cold cuts. READ  

Sweden Floods
More rain expected as floods hit day four
Photo: Johan Nilsson/TT

More rain expected as floods hit day four

UPDATED: Sweden's floods showed no signs of abating over Thursday night, with highways closed, emergency teams working overtime, and more rain on the way. READ  

Ikea opens first store in the Balkans
An Ikea city centre store in Hamburg. Photo: TT

Ikea opens first store in the Balkans

Swedish furniture giant Ikea has opened its first store in the former Yugoslavia, near Croatia's capital Zagreb. The move marks the company's first step in an expansion to the Balkans market. READ  

Elections 2014
'Sweden Democrats hold the key to elections'
Jimmie Åkesson. Photo: Bertil Ericson/TT

'Sweden Democrats hold the key to elections'

With national elections around the corner, political scientist Stig-Björn Ljunggren says there's a hive of activity behind the scenes, and that the right-wing nationalist party could end up being the key player. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Politics
'Sweden Democrats hold the key to elections'
Society
Swedes celebrate first day of smelly fish season
Politics
Sweden elections: How do they work?
Finest.se
Gallery
People-watching August 20th
Society
Did you know the Bronx in NYC was named after a Swede?
Blog updates

17 August

Sea Fever (Around Sweden in a kayak) »

"I’m going to keep this post short and sweet as its not something I take any pleasure in writing. After much deliberation I have made the heartbreaking decision to abandon my trip after 1200km due to reoccurring injury. It is not a decision I have made lightly and it is one that has been truly devastating..." READ »

 

17 August

St. Louis strong (Blogweiser) »

"It’s typically a bad sign when my hometown makes news in Sweden. St. Louis was in the headlines here a few years ago when a tornado struck the airport. The city also caught attention after a politician talked about ‘legitimate rape’. Now, shooting and riots this week in Ferguson, a part of St. Louis, are..." READ »

 
 
 
Politics
"Iraq reminds me of the Yugoslav wars. It's the same story."
Society
Swedes slam Danes for 'racist' art
National
Majority of Swedes favour more or just as many refugees
Society
Lock your bathrooms: Swedish toilet invader on the the loose
Politics
'Assange will not leave until safe'
Gallery
See more images from the southern Sweden floods
Sponsored Article
Find out what gives this Swedish school executive appeal
Society
Serial chicken smuggler caught at Norway border. Again.
Society
This gold coin may be the key to solving a Swedish massacre
Shutterstock
Lifestyle
The Swedish mentor (and why you may need one)
Politics
Reinfeldt calls for tolerance to refugees
Gallery
People-watching August 16-17
National
Sweden celebrates 200 years of peace
Society
Top ten literal Swedish words
Politics
'Terror training should be illegal': Liberal Party
Gallery
Swedes talk about 200 years of national peace
Politics
Islamic extremist shakes Sweden with TV threat
National
Teacher fined for 'Hitler salute' in German class
Features
Kiruna residents talk life in a town on the move
Skatteverket
Sponsored Article
Introducing... ID cards and permits in Stockholm
Sponsored Article
Introducing...Your finances in Stockholm
Sponsored Article
Introducing...Housing in Stockholm
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Germany

More news from Germany at thelocal.de

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

718
jobs available
Swedish Down Town Consulting & Productions
Swedish Down Town Consulting & Productions is an innovative business company which provides valuable assistance with the Swedish Authorities, Swedish language practice and general communications. Call 073-100 47 81 or visit:
www.swedishdowntown.com
PSD Media
PSD Media is marketing company that offers innovative solutions for online retailers. We provide modern solutions that help increase traffic and raise conversion. Visit our site at:
http://psdmedia.se