“The message has gotten through: the euro zone will defend its money,” French Finance Minister Christine Lagarde told reporters in Brussels early Monday.
With massive resolve after a 14 hour meeting, 16 euro nations agreed to offer financial assistance worth as much as 750 billion euros ($962 billion) to countries under attack from speculators. The European Central Bank (ECB) will counter negative and “severe tensions” in “certain” markets by purchasing government and private debt.
Marco Annunziata, chief economist at UniCredit Group in London, quickly released a statement following the ECB announcement: “This truly should be more than sufficient to stabilize markets in the near term, prevent panic and contain the risk of contagion.”
“I think they will have bought themselves a significant amount of time to do the right thing,” said Barry Eichengreen, an economics professor at the University of California, Berkeley.
“This sets a precedent for the rest of the life of the Central Bank and will have likely surprised even the most seasoned observers,” said Jacques Cailloux, chief European economist at Royal Bank of Scotland Group. “The ECB’s intervention was necessary to short circuit the negative feedback loop...”
The swift and united action will likely now turn most eyes back onto the fundamentals of a worldwide economic recovery that is accelerating and a U.S. jobs market that is growing again.
When all you read is gloom, turn here for a much different perspective.