European Banks Facing Disastrous Sell Off

October 10, 2012 05:58

That would hurt credit and crimp growth by 4 percentage points next year in Greece, Cyprus, Ireland, Italy, Portugal and Spain, Europe’s periphery. – Bloomberg



By Sandrine Rastello at


“Intensification of the crisis has manifested itself in capital outflows from the periphery to the core at a pace typically associated with currency crises or sudden stops,” the IMF wrote in its Global Financial Stability Report released today. “Restoring confidence among private investors is paramount for the stabilization of the euro area.”

The Washington-based IMF cut its global growth forecasts yesterday and warned of even slower expansion if European officials don’t address threats to their economies. While the European Central Bank’s plan to purchase bonds of debt-burdened countries bought governments time to act, divisions over a banking union and Spain’s reluctance to ask for a bailout threaten to boost borrowing costs.


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