European Economic News -Weekly Update 22/9/2014

Sept. 22, 2014 - PRLog -- Capetian Asset Management is a world-wide private equity firm with the resources and expertise to source, evaluate, and manage private investments globally in both developed and developing markets and across many industrial and commercial sectors.

European Economic News -Weekly Update 22/9/2014

Later today Mario Draghi will report in front of the European Parliament and no doubt the main topic of conversation will be his recent announcement on the ECB stimulus program and possible step to be taken in the future to attempt to secure the European economy.

A few weeks ago Mr. Draghi the head of the European Central Bank announced a new line of stimulus many analysts were not expecting.

The new programs included dropping the benchmark rate to 0.05% and creating a fund of €400bn, made available to banks at 0.15%pa for up to 4 years. The news was surprising and many felt that it would help increase lending to businesses and thus help stem the spiraling economy of Europe and effectively introduce plenty of capital to the economy. What we expect to be told is that just €82.6bn was taken by 255 banks, however it is predicted that between €100-€200mn could be drawn down this week before the cut off is applied.

Banks will then have to wait until December for the second issue and in that time the ECB will have started its Asset Quality Review whereby it will be looking into banks health and establishing their true fiscal state. This has the potential to flag several banks in need of direction or assistance and could open a can of worms for European governments.

The Treasury Secretary in the US has just asked the ECB to look to further stimulus, ala Federal Reserve style. He suggested a move to Asset Back Purchases just like the program almost coming to completion in the US. Although this has appeared to work in the US, with the EU being made up of countries rather than states it would be a far harder program to implement and for that reason it is believed that the ECB will look to avoid committing to a program like this unless it feels it has no other options.

So far the ECB has been proactive in its approach and most definitely done its best to react to the current financial climate in Europe however concerns are that as its members continue to see stagnant growth, whether injecting capital into the economy is going to be sufficient for all of the EU's 28 members.

Key Market Data as of 22/9/2014:

Nikkei 16,205.90 (-0.71%)

FTSE 100: 6,837.92 (+0.27%)

Dow Jones: 17,279.74 (+0.08%)

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