Post date: Jun 20, 2012 7:49:25 AM
G20 leaders welcome Europe's plans to integrate its banking sectors, but Asian markets lukewarm, eye Fed stimulus.
G20/ASIA MARKET - Europe's leaders gained support for their ambitious but slow-moving overhaul of the euro zone, despite pressures building up in financial markets for quicker solutions to its debt crisis.
Europe told a G20 summit it intends to integrate its banking sectors, a step long called for by countries like the United States.
U.S. President Barack Obama said the sense of urgency was clear, and European policymakers understood what needed to be done.
U.S. PRESIDENT BARACK OBAMA SAYING:
"What's missing right now is just a sense of specifics and the path whereby that takes place. When markets see that, that can help to build confidence and reverse psychology. So there are going to be a range of steps that they can take, none of them are going to be a silver bullet that solves this thing entirely over the next week or two weeks or two months, but each step points to the fact that Europe is moving towards further integration rather than break-up, and that these problems can be resolved and points to the underlying strength in Europe's economies."
International Monetary Fund chief Christine Lagarde also hailed the progress saying "the seeds of a pan-European recovery plan were planted."
Lagarde says euro zone countries have to work out short term crisis management tools, while also implementing long-term policies that promote economic recovery and growth.
IMF CHIEF CHRISTINE LAGARDE, SAYING:
"It doesn't matter if it takes a lot of time, it's got to be done well, but the two have to operate in parallel: the crisis management tools and the indication now of what the collective political determination is, in order to build for the future, this better union that many European want, and certainly, members of the euro zone have expressed."
Market reaction to the news was muted, with Asian stocks higher on rising expectations the U.S. central bank will provide more monetary stimulus to rev up the faltering economy.
Investors are wary Spain will require a bailout, after interest payments on its long term debt rose above 7 percent, a level seen as unsustainable for Madrid.
Welcoming the support from G20 leaders, Spanish Prime Minister Mariano Rajoy promised Spain would play its part.
SPANISH PRIME MINISTER MARIANO RAJOY, SAYING:
"We are going to keep undertaking the reforms that the Spanish economy requires. We are going to keep up our promise to not spend what we do not have and we are going to do our best for a greater Europe.
There must be a banking union and fiscal integration, because we believe that is what's best for Europeans, as well as for Spaniards."
G20 leaders now await a European Union summit next week where European officials say they will launch the long process of deeper integration, with the aim of finalizing a broad plan by December.
Arnold Gay, Reuters.