Thursday, 31 May 2012

Euro Is Facing Disintegration, Commission Warns

THE DAILY TELEGRAPH: The euro faces 'disintegration' unless European governments do much more to work together, the European Commission has warned.

Olli Rehn, the economics commissioner, gave the warning as Mario Draghi, the head of the European Central Bank, criticised national leaders for a “lack of action” to help the single currency out of its crisis.

Spain remained at the eye of the financial storm yesterday, amid continuing fears for its banking sector.

Investors in Spanish banks are withdrawing money at a record rate, figures showed yesterday. More than £55 billion was withdrawn and moved out of the country last month.

Yesterday’s figures are for the month before the Spanish banking crisis entered its latest phase with the nationalisation of Bankia, one of the country’s biggest banks.

Even more money is thought to have left the country since then, raising fears that Spain is locked in an unbreakable cycle of market panic.

The flow of money out of Spain has raised fears that its banking system could collapse, requiring a bail-out that its government cannot afford.

Those fears are pushing up Spanish borrowing costs, which intensifies pressure on Spanish banks. » | James Kirkup, Deputy Political Editor | Thursday, May 31, 2012

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