Investors were warned this week, when a report was issued by Moody‘s saying credit risks will continue to rise without measures to stabilize markets in the short term, the ratings company said in a statement today. European Union policy makers also face constraints to act quickly to restore confidence, it said.
“In the absence of major policy initiatives in the near future which stabilize credit market conditions, or those conditions stabilizing for any other reason, the point is likely to be reached where the overall architecture of Moody’s ratings within the euro area, and possibly elsewhere within the EU, will need to be revisited,” the statement said. “Moody’s expects to complete such a repositioning during first quarter of 2012.”
The European crisis so far has cost five leaders their jobs, including Italian Prime Minister Silvio Berlusconi. Euro- area finance ministers will meet in Brussels tomorrow as governments bid to regain the confidence of financial markets after a week in which the euro-area sovereign debt crisis worsened.
Investors are shunning riskier countries’ bonds as Italy, which has a bigger debt load than Spain, Greece, Ireland and Portugal combined, struggles to ward off contagion from a debt crisis that started in Greece more than two years ago.
Several solutions are on the table, including a plan proposed by some leaders to issue a joint eurozone bond, or by issuing new debt through the European Central Bank. Either of which may cause havoc for credit markets.
(아주경제 앤드류 이 기자)
reporter
Park Sae-jin
swatchsjp@ajunews.com