Tags: Fitch | Europe | Ratings | euro

Fitch: Europe Summit Eases Euro Ratings Pressure

Friday, 29 Jun 2012 03:21 PM

 

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The summit of European leaders held in Brussels this week eases near-term pressure on eurozone sovereign ratings, Fitch Ratings said in a statement on Friday.

Eurozone leaders agreed to let their rescue fund inject aid directly into stricken banks from next year and intervene in bond markets to support troubled member states.

They also pledged to create a single banking supervisor for eurozone banks based around the European Central Bank in a landmark first step towards a European banking union that could help shore up struggling member Spain.

"Eurozone leaders' decision to create a 'single supervisory mechanism' for banks is an important step towards ensuring the long-run viability of the euro," Fitch said in the statement.

"By weakening the link between the financial health of banks and their domestic sovereign governments, it will enhance the effectiveness of ECB monetary policies and moderate the vicious cycle between sovereign and bank creditworthiness that has been a pernicious feature of the eurozone debt crisis," the statement added.

© 2014 Thomson/Reuters. All rights reserved.

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