Wednesday, August 24, 2011

Finns meet to reconsider Collateral Deal at Merkel's behest!

Business Insider carries the report reflected in my headline, linked here. As the Finnish parliament required the collateral arrangement with the Greeks, it seems doubtful that the Finns can participate in the second Greek Bailout without such insurance cover. Going ahead without the Finns will remove an important triple A rated guarantor from the package, not a good plan at this stage of the game.

It was clear from the statements following the 21st July agreement that Finland was to negotiate a collateral agreement with Greece. This is borne out by the reference in the summary of the agreement reached, linked here, which states the following:

9. Where appropriate, a collateral arrangement will be put in place so as to cover the risk arising to euro area Member States from their guarantees to the EFSF.

It is difficult to follow how even the German Chancellor can now ban such deals!



Post a Comment

<< Home