German High Court Approves ESM, EU's Barroso Calls for Federation of Euro States
THE TAKEAWAY: German high court approves ESM with conditions -> EU’s Barroso calls for a federation of states and a single bank supervisore -> Euro trading steady
The German Federal Constitutional Court has decided to allow for the ESM ratification with conditions and it rejected emergency challenges. The court said that the German share of the 500 billion Euro bailout fund must be capped at 190 billion Euros, unless the parliament decides to raise it.
Before that, European Commission Jose Barroso not only called for a single supervisor for all Euro-zone banks in his speech today, but called on all European Union countries to join in a federation of nation states. He said that such a federation would fix structural weaknesses exposed by the debt crisis, but it would not be a super-state.
Barosso said a single supervisor of Euro-zone banks would be a stepping stone toward a banking union. Barroso said the European Commission will publish a blueprint for the economic changes this fall.
Finally, Barroso was optimistic about Greece’s future, saying a turning point could be possible as soon as this autumn.
Both announcements were mostly as expected and therefore had no lasting impact on Euro trading, despite some initial volatility. EURUSD is trading around 1.2875 in today’s session, slightly below the 4-month high that is just below 1.2900.
EURUSD 15-minute: September 12, 2012
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