Asta Pravilonytė

Every manager can call him or herself a good strategist if he or she only works within an environment that is favourable; however, it is only in times of stress that one truly learns what one's capabilities are!

















 Wednesday, 1 August 2012

Value creation should be a priority of stability policy, shouldn't it?


US Treasury Secretary Timothy Geithner held private talks with German Finance Minister Wolfgang Schaeuble and ECBís President Mario Draghi this week. The other confidential meeting was carried between ECBís President Mario Draghi and Bundesbank Chief Jens Weidmann before the ECBís monetary policy vote on Thursday, 2 August. Last week M. Draghiís publicly announced to do whatever it takes in order the Spainís and Italyís borrowing costs were reduced and euro stability was maintained. However, Germanyís position remained against resuming the ECBís government bond buying programme and issuing Eurobonds. Broadcasted the US Treasury Secretaryís interview with Bloomberg on Wednesday, 1 August revealed T Geithnerís concerns about market stability and desires to sustain investorsí confidence, though usage of the euro zone's rescue funds is not clear. Does it mean that Ä500bn funds of European Stability Mechanism could be used to implement reforms not necessary related to the recapitalization of European banks and sovereign bonds purchase programme?


The slowing down global economy growth was captured with different statistics. However, World Trade Organization's observations may reveal some new aspects of slowing growth. According to the World Trade 2011, Prospects for 2012, WTO's press release on 12 April 2012, the world trade expended in 2011 by 5.0%, wich is a sharp deceleration from 2010 rebound of 13.8%. Moreover, it was predicted that the growth will slow further to 3.7% in 2012. On World Trade Report 2012 released on 16 July, 2012, WTO focused on new international trade challenges - increased use of non-tarif measures. These measures reflect regulatory standards for manufactured and agricultural goods. So, political concerns about the health, safety, environmental quality and other social aspects may affect international trade even more than tariffs.


Consequently, value creation should be a priority of stability policy, shouldn't it?













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