Portugal and Greece highlighted for “adding to Eurozone stress”

Portugal and Greece are the two countries in the Eurozone that stand out for “aggravating the level of systemic stress in sovereign debt markets”, said the European Central Bank in a study released on Tuesday.

Other countries have “compensated for this disturbance”, the report added – on the same day that elsewhere the nation’s media was suggesting President Marcelo Rebelo de Sousa was “giving the government until 2017” to see if its fragile left-wing alliance could really stand the test of time.

With dinheirovivo website concentrating on the angle that Portugal and Greece were “adding” to sovereign debt stress across the single market, Bloomberg has carried a story this morning (Wednesday) affirming that European Central Bank policy makers are calling on governments to “coordinate their economic strategies to sustain the region’s recovery and counter rising opposition to integration”.

“For the euro area, for its citizens, 2016-2017 is the decisive time to act,” Francois Villeroy de Galhau, the French central-bank chief, told an Institute of International Finance meeting in Madrid.

“Villeroy said central bankers need to be involved in the discussion about economic policy, though decisions must be taken by political leaders”, writes Bloomberg adding that “the Frenchman called for reforms at a national level and a “full coordination of national policies” that could include a fiscal expansion in countries such as Germany”.

These various stories are playing at a crucial moment in the EU’s history. Not only is the UK so-called Brexit referendum ‘just around the corner’, the migrant crisis is reaching another climax – with Turkey demanding free access for its citizens throughout the Schengen Space if it is to comply with EU requests to hold back the flood of refugees – and Poland suddenly at loggerheads with Brussels over changes it plans in its Constitution.

But ECB vice-president Vítor Constâncio has played the latest report down saying he is personally convinced that within the next two years inflation levels within the Eurozone will recover and get close to the 2% defined by his institution.

In an interview with Bloomberg, the former governor of the Bank of Portugal said the ‘non-conventional’ (quantitative easing) measures adopted by the ECB had produced “positive effects”, but he agreed that the maintenance of negative interest rates was having “collateral effects” – particularly on the profits of banks.

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