The European Commission is discussing the idea of creating a monetary fund modeled on the Washington-based International Monetary Fund (IMF). The new fund‘s role would be to assist EU members in dealing with financial issues and fight against speculation, as it is the case with Greece.
After the implementation of a unique currency and a common central bank (ECB), a European Monetary Fund seems like the next logical step towards assuring EU stability.
Preliminary work is already in progress and a proposal could be presented in June.
However, it could take time and a lot of efforts before the project sees the light, and it is unlikely that is could serve to help Greece.
Many issues have to be resolved such as the way it would be funded, choosing the penalties on failure to observe fiscal discipline, and the question of leadership of the new institution.
On those issues, the EMF could face strong resistance amongst EU countries who‘s economy is more fragile than that of Germany or France.
How will it affect the euro?
The euro is unlikely to be affected in the short term as we are still far from the EMF. Hence, the falloff could continue.
However, we can imagine that a repetition of the Greek deficit problem would not only be less likely to happen, but would also be defused much more quickly. Moreover, speculative damage done to the euro could be prevented.
Meanwhile, all indicates that Germany and France will have to continue to spend their money in order to hold together the EU.
KNOWLEDGE BASE - Exclusive Forex Educational Articles
Managing Risk with Stop Loss Orders in the Forex MarketStop loss orders are one of most fundamental risk management techniques used by forex traders. Ideally, every trading system should include the use of a stop loss on every trade, ...read more |
Trading Fibonacci ExpansionsMost traders know and have used Fibonacci retracements at one point or another in their careers, but Fibonacci expansions are less commonly found in charts. Drawing them only takes a ...read more |
Trading Bollinger BandsBollinger Bands are one of the most popular technical indicators traders like to use. There are many strategies built entirely around them. In this article we will focus on t...read more |
Understanding Central BanksCentral banks are at the heart of their country’s economy and play a key role in the global markets. Their importance is particularly relevant when trading the forex, as they ...read more |
|
More in: Forex Basics, Forex Analysis, Technical Analysis, Technology |
|||
- + 12 |
|||
All information on this page is subject to change. The use of this website constitutes acceptance of our terms of use. Please read our risk disclaimer and privacy policy
