Mar. 20 - The EU is closing on a deal to complete a banking union - while Greece ponders bringing forward its first debt auction in four years. Both could be signs of progress towards a rehabilitated Europe - but, as Hayley Platt reports, the plans have their detractors.
As EU members arrive to discuss sanctions on Ukraine, Europe reaches a deal to complete its long-awaited banking union. A draft agreement outlines the creation of a new agency with powers to shut failing euro zone banks. They'll be a 55 billion euro pot of money to cover the costs, paid for by the banks and built up over eight years. But no extra from the EU should there not be enough. Didier Saint-Georges from Carmignac Gestion welcomes the news but says there are still issues remaining. SOUNDBITE (English) DIDIER SAINT-GEORGES, CARMIGNAC GESTION, SAYING: "If there is still one weakness it is the link between the banks and the sovereign risk and clearly this banking union is going to make a lot of progress in this perception of closing the link between the banks and the sovereign risk, so that's going in the right direction." Elsewhere, Greece is still beset by protests but there are positive signs on the horizon. The government is considering planning a return to the global bond market sooner than expected. A senior official told Reuters it's considering raising 2 billion euros in 5-year bonds in the first half of this year. Coming just after international lenders signed off on a bailout review, it may further boost confidence for investors. But Marshall Gittler of Ironfx Global isn't convinced. SOUNDBITE (English) Marshall Gittler, Head of FX Strategy, Ironfx Global, saying: "It's fiscal/financial situation hasn't really improved that much or if it has it's only improved by sending the country into one of the worst recessions we've seen since the 1930s and yet people are now willing to forgive them all these debts even though they blew up just a couple of years ago and they're not fully recovered yet." The European recovery appears to be spreading, if sluggish. Fourth quarter growth in the euro zone showed a modest rise of 0.3 percent. A positive departure from the gloom of recent years. Not even Ukraine's troubles are likely to dampen momentum. SOUNDBITE: Marshall Gittler, Head of FX Strategy, Ironfx Global, saying (English): "It's quite clear that European countries really have no stomach for a very strong fight. Their main focus is economic recovery not east/west tension and they seem to be doing everything they can to defuse the situation, because the sanctions they put on were quite toothless." Greece's economy shrank 3.7 percent last year. That was better than expected. But with unemployment still at a record high of 28 percent, Greece, like many of its European nations, still face many challenges ahead.