eurozone zombie banks


Bank deposits with the ECB now stand at their highest level since June 2010 at €905bn (£772bn) as lenders withdraw deposits held with their peers and put them into the central bank. At the same time, banks in major eurozone countries such as France and Italy have become increasingly reliant on central bank funding. This follows the trend seen in smaller countries like Ireland where lenders have effectively becomes taxpayer-funded "zombie" banks.
The European banking sector's problems are being exacerbated by a wave of asset sales as lenders look to dramatically shrink their balance sheets. UBS estimates eurozone banks could sell off between €3.7 trillion and €4.5 trillion of assets in the next three years.
The financial resources to bail out Europe must primarily come from within the continent, the official said, adding that the IMF cannot substitute for a European show of force.
President Barack Obama has stressed that Europe has the means to resolve its crisis.
Europe simply needs to muster the political will, Obama said December 8,
As part of the summit, European Union members agreed to raise as much as 200 billion euros, or $267 billion, for loans the International Monetary Fund could offer to debt-wracked nations on the continent. But European officials failed to increase the 500 billion euro, or $689 billion, cap on their own bailout lending funds.

Capital flight to Germany


The deal clinched by European leaders in the early morning hours of Friday seems unlikely to ease the intense financial pressures that have plagued the currency bloc for over two years. Nor will it dispel concerns that the euro area could eventually break apart, with one or more countries exiting despite the catastrophic consequences that would entail.
European companies spent billions preparing for the euro when it was introduced in 2000 by 11 countries. Contingency planning for an unraveling of the currency involves cutting investment, moving money to Germany, transferring headquarters to northern Europe from southern, and even going out of business, according to interviews with more than 20 executives.
The Bundesbank, Germany’s central bank, registered capital inflows of 11.3 billion euros ($15 billion) from non-banks in September, according to the breakdown of its current account published Nov. 9. That helped transform a deficit of 47.3 billion euros in Germany’s balance of other capital flows in August to a surplus of 700 million euros in September.
Euro-area governments have to repay more than 1.1 trillion euros of long- and short-term debt in 2012, with about 519 billion euros of Italian, French and German debt maturing in the first half alone, data compiled by Bloomberg show. European banks have about $665 billion of debt coming due in the first six months, according to Citigroup Inc., based on Dealogic data.
Holger Schmieding, chief European economist at Berenberg Bank in London, said the “avalanche” of refinancing needs in the next two months means the crisis could worsen and “the ECB would then finally be forced to step up its anti-crisis response to save the euro and itself.”

Printing new Irish Pounds?
The Central Bank of Ireland has said it is not printing Irish punts and is only printing euro.

It is understood that the Central Bank is not in talks with any private printing companies regarding evaluating the need for additional capacity to produce new currency.

In recent weeks, British Chancellor George Osborne said his government had contingency planning in place in the event of the break-up of the euro.

It is understood that authorities in Ireland have given thought to plans in the event there is any significant change to the single European currency.

However, the official position is that remaining within the euro is the only option being actively considered by policy makers and the Department of Finance has not confirmed nor denied that there are any contingency plans in place.

Today's Wall Street Journal reported that the Central Bank is evaluating whether it needs to secure additional access to printing presses in case it has to print new bank notes to support a "reborn" currency.

The US newspaper quotes "people familiar with the matter" and says other central banks have started to weigh contingency plans to prepare for the possibility that countries leave the eurozone or the eurozone breaks up entirely.

The bank said it would not comment on what it called "speculation".
The Irish pound (Irish: Punt Éireannach) was the currency of Ireland until 2002. Its ISO 4217 code was IEP, and the usual notation was the prefix £ (or IR£ where confusion might have arisen with the pound sterling or other pounds). The Irish pound was superseded by the euro on 1 January 1999,[1] when the Irish pound legally became a subdivision of the euro; euro currency did not begin circulation until the beginning of 2002.