Probably no support for Eastern Europe

Probably no support for Eastern Europe

03-02-2009 14:33

Today the developed Euro zone countries announced that the Eastern European banks will not get any financial support as the euro fell considerably versus the US dollar and against the Japanese yen. Stock markets dropped worldwide and risk appetite decreased while analysts believe that a cooperative effort is the only way to solve the banking crisis.

Non-euro countries suffer far more

The non-euro countries are facing a massive pressure due to the banking crisis, which results in a downgrade of their currencies. The banks are threatened by major risks while the national currencies dropped against the euro and the dollar. The slow approach by the European Union to fight the crisis is a shame for the non-euro countries.

Stock markets, risk appetite and euro fell

For the second day the European currency fell versus the Japanese yen and against the US dollar while the euro went up against the British pound. Stocks fell worldwide and also risk appetite decreased further which resulted in traders preferring less risky currencies. Today the European Union leaders rejected the €180 billion ($227 billion) plan to support the Eastern European banks.

Only a cooperative approach can help the euro

According to analysts the fall of the euro can only be countered by a cooperative approach after boosting the financial system of the regional economies by appending some confidence. The local measures by the individual countries will not be able to counter the banking crisis and will not be sufficient to support the euro against the yen and the dollar.