Business Today

According to analysts of the European Union steps to establish an emergency fund worth 750 billion euros is the right thing to do at this time. Chief Economic Marco Annunziata of UniCredit Group in London said that 750 billion euro figure is an awesome power. He believes that this amount would be sufficient in the process of stabilizing the market for short-term. Certainly this decision of the European Union currently has succeeded in reducing the risk of transmission of panic and crisis.

Previously, the steps that the EU has failed in reducing the fiscal crisis that struck Greece. As a result, last week the euro has decreased by 4.1%, biggest weekly decline since the collapse of Lehman Brothes. European stock markets also declined sharply, the largest in 18 months, Europe Stoxx 600 Index decreased by 8.8% weekly.

Establishment of emergency funds is reported to come from EU countries valued at 440 billion euros in loans and guarantees. Meanwhile the EU budget spent 60 billion dollars worth of donated funds and the IMF’s 250 billion euro. Nevertheless the IMF itself rejected an official statement stating a willingness to channel funds amounting to 250 billion euros in emergency funding the establishment of the European Union. IMF President Dominique Strauss-Kahn said the IMF’s approach is to the individual countries.

Positive comments on the establishment of emergency funds also came from Professor of Economics, University of California Barry Eichengreen. According to the European Union Eichengreen this step will give significant time to be able to improve conditions in the region without any disturbances that potentially damage the market panic.

In addition to the formation of this emergency fund the IMF and the European Union has approved the distribution of aid to Greece which has experienced a budget deficit reached 13.6% of GDP. A reward for such support Greece has committed to retain its previous policy of budget cuts which have sparked protests and riots in the country.

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