Reuters is reporting that according to comments from David Riley, the head of sovereign ratings for Fitch, the ratings agency says that the ECB should do more to prevent a collapse of the Euro.
Specifically, Riley says that the ECB should ramp up its sovereign debt buying to support Italy and prevent a "cataclysmic" collapse of the euro.
Riley told investors Wednesday, "The end of the euro would be cataclysmic. The euro is a reserve currency. What would that do in terms of financial and political stability?"
Riley added that while a euro collapse is not Fitch's baseline scenario; the euro’s demise would be disastrous for the global economy. Riley said that such a collapse could occur if Italy did not find a way to resolve its debt problems.
"It is hard to believe the euro will survive if Italy does not make it through," Riley said.
Riley went on to say, "Why not have the ECB come out and say 'We are going to cap interest rates', say 'We are not going to allow interest rates to exceed 7 percent' or whatever level they see is the limit?... Why not turn the EFSF into a bank so it can borrow from the ECB so it doesn't have to go to the market?"
The head of sovereign debt ratings at Fitch also urged the ECB to abandon its reluctance to upping purchases of Eurozone bonds and drop the bank’s resistance to lending directly to the EFSF.
"Can the euro be saved without more active engagement from the ECB? Quite frankly we think no," Riley asked.
Recall that Fitch said on Tuesday that Italy would likely be downgraded soon and that the ratings agency would come out with their views by the end of January.
Riley also noted that Greece still has the potential plunge the Eurozone into crisis and that France remains in a precarious position at the present time.
Recall also that French President Nicolas Sarkozy and German Chancellor Angela Merkel said at the conclusion of Monday’s bilateral meeting that they will ask the ECB to do all it can to help with the sovereign debt crisis.
Introducing the Option Income Generator. This new service is designed to help tame market volatility by producing monthly income via a proprietary buy-write strategy. Check it out today!
Remember, you are in control your email alerts! You can receive alerts for more than 25 free research report alerts including: The “10.0” Report, The Insiders Report, ETF Leaders Report, and The Focus List.
