Based on its regular economic and monetary analyses, the Governing Council continues to view the current key ECB interest rates as appropriate. It therefore decided to leave them unchanged. Considering all the new information and analyses which have become available since our meeting on 5 August 2010, we continue to expect price developments to remain moderate over the policy-relevant medium-term horizon, benefiting from low domestic price pressures. Recent economic data for the euro area have been stronger than expected, partly owing to temporary factors.

The annual rate of change of M3 stood at 0.2% in July 2010, unchanged from the previous month. The three-month average of the annual rates of change of M3 over the period May 2010 - July 2010 stood at 0.1%, compared with 0.0% in the period April 2010 - June 2010.

Sweden’s top central banker Saturday said the country’s economy looked in good shape despite the slowdown in the global recovery, indicating Swedish interest rates will continue to increase. Riksbank Governor Stefan Ingves said in an interview on the sidelines of a meeting of central bankers here that the recovery in global trade would allow the Swedish economy to continue growing. “Growth will be good in the Swedish economy in the coming years,” Ingves said.

Axel Weber, the Bundesbank president, has put himself on a collision course with European Central Bank policymakers by arguing publicly in favour of extending emergency help for eurozone banks until at least next year.

The comments by Germany’s central bank head were unusually forthright and suggested he wanted to assert his authority ahead of a decision next year on a successor to Jean-Claude Trichet as ECB president.

GDP increased by 1.0% in both the euro area (EA16) and the EU27 during the second quarter of 2010, compared with the previous quarter, according to flash estimates published by Eurostat, the statistical office of the European Union. In the first quarter of 2010, growth rates were +0.2% in both zones. Compared with the same quarter of the previous year, seasonally adjusted GDP increased by 1.7% in both the euro area and the EU27 in the second quarter of 2010, after +0.6% and +0.5% respectively in the previous quarter. During the second quarter of 2010, US GDP increased by 0.6% compared with the previous quarter, after +0.9% in the first quarter of 2010. US GDP rose by 3.2% compared with the same quarter of the previous year (+2.4% in the previous quarter). 

At today’s meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 1.00%, 1.75% and 0.25% respectively.

The decision, at a meeting of the ECB’s governing council in Frankfurt, was expected. Eurozone inflation has picked up recently but at 1.7 per cent in July was within the ECB’s target of an annual rate “below but close” to 2 per cent.

The euro area (EA16) seasonally-adjusted unemployment rate was 10.0% in June 2010, unchanged compared with May4. It was 9.5% in June 2009. The EU27 unemployment rate was 9.6% in June 2010, unchanged compared with May. It was 9.0% in June 2009.

Spain's Santander (SAN.MC) consolidated its full service operation in Germany with the acquisition of the retail banking division of Sweden's SEB (SEBa.ST), the bank said on Monday.

The 555 million euros ($699 million) deal comes as the euro zone's No. 1 bank by market capitalization attempts to increase its footprint in Europe's biggest economy at a time when the retail banking sector is in a state of flux.

Europe’s top bankers are discussing a proposal for a €20bn private sector European Recovery Fund, which could bail out failed banks in the event of another financial crisis.

Alessandro Profumo, chief executive of Italy’s UniCredit, believes such a fund could raise as much as €20bn ($25bn) of capital over a few years, providing a failed bank with the chance to revive itself in the commercial markets, without recourse to government bail-out financing.

Europe continues to constitute the epicenter of Act II of the global financial crisis, which has now mutated into a sovereign-debt crisis within the eurozone. How could this happen when, at least on paper, all problems had seemingly been resolved during May’s extraordinary EU summit meeting, which created a European Financial Stability Facility (EFSF) and ensured total funding of close to $1 trillion?

Robert McDowell is giving a speech on the Euro Crisis for an hour on 3rd July near Tubingen. Here is his presentation.

 Download the report here!

In 2009, EU27 FDI (foreign direct investment) in extra-EU27 countries (outflows) fell by 24%, from 348 billion euro in 2008 to 263 bn in 2009, while FDI into the EU27 from the rest of the world (inflows) increased by 12%, from 199 bn to 222 bn.

EU leaders have agreed to publish "stress tests" of banks next month to show investors where any potential risks lie. EU Commission President Jose Manuel Barroso said the results would be published "on a bank by bank basis - this should reassure investors". The announcement came after EU summit talks dominated by the debt burden weighing on many member states. The EU is wrestling with Europe's worst public debt for decades. Leaders are intent on preventing contagion from the Greek budget crisis.

EU Commission, DG Internal Market: In order to advance swiftly in completing the necessary reforms to ensure a safe and stable financial system in Europe, the European Commission has launched two consultations in the area of financial services.

The leaders of France and Germany will seek to overcome deep-rooted disagreements on European economic governance at a meeting in Berlin Monday, setting the tone for a European Union summit later this week.

A show of unity from Berlin and Paris, the motors behind European integration, is seen as crucial for reaching decisions at the summit Thursday on tightening policy coordination and strengthening budget discipline to contain a debt crisis.

Read about it here:

http://www.asymptotix.eu/content/european-stabilisation-bank-proposal-asymptotix

The European Central Bank promised extra cash on Thursday to keep euro zone liquidity flush until the end of the year but stayed resolutely silent on the details of its controversial government bond buying program.