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Speculations on the true health of the European banking sector and Flaherty's latest comment on global financial crisis

October 19th, 2012 - Speculations about the true health of the European banking sector do not stop: Jim Flaherty's statement on banks' financial health adds to the long list of commentaries about the immense work the EU still has to do to get back on their feet.

"Banks still need to shore up their capital levels in order to combat the crisis", Canada Finance Minister Jim Flaherty

Patrick Leblond agrees with the Canadian Finance Minister Jim Flaherty and thinks that progress has been made in Europe but there remains much to be done. It is a fact that many European banks remain fragile and need to improve their capitalization. For example, it has been estimated that Spanish banks need capital contribution in the amount of 40-60 billion euros to restore their financial health. These sums will now come from the newly-established European Stability Mechanism, which is the permanent bailout fund created by European member states.

Given that it has now been more than one year since the European Banking Authority (EBA) last stresstested European banks, Minister Flaherty is therefore correct to talk about "black boxes" in terms of what is the true health of European banks in his interview with Bloomberg Television in Tokyo last week, after a meeting of the Group of Seven Finance ministers.
A new stress test is now overdue (except for Spain, which was forced to stress test its banks); unfortunately, the EBA has not indicated when the next stress test would take place. In the meantime, investors and depositors can only speculate about the true health of the European banking sector, which ends up making the situation worse than necessary.

Dr. Patrick Leblond is an expert in the field of European and North American Economic Integration at the University of Ottawa. He is part of a cross-Canada network of experts working on European policy issues, the Strategic Knowledge Cluster Canada-Europe Transatlantic Dialogue.

The Nobel Peace Prize: A wake-up call for an ailing European Union?

October 13th, 2012 - The timing could not have been more bizarre: Just when the European Union deals with its most fundamental crisis in history, when it seems so deprived of a mobilizing vision for the future and when it is contested by an increasingly sceptical political public, it receives the Nobel Peace Prize for its past achievements in promoting peace. Is it justified? It surely is. If one distances oneself only a little but from the media frenzy regarding the current crisis of the Euro the record of the European Union in historic terms is impressive: it has allowed for taming the nationalist fervour, putting an end to the European legacy of warfare, and assisting formerly authoritarian political regimes to grow into mature liberal democracies (in Western and Eastern Europe). The Nobel Peace Prize might serve as a wake-up call for the EU to realize that it needs to come up with a vision that moves the heart and minds of European citizens. Preventing a war on European soil might have been the appropriate idea for a post-war generation. Current Europeans are no longer moved by this idea (mainly due to its successful implementation). Even if not intended that way the Nobel Peace Prize has the promise to remind the current European political elite (and public) that the idea of Europe and the European Union as an institution is in dire need of new leadership and direction.

Oliver Schmidtke is Director for the Centre for Global Studies (CFGS) and Jean Monnet Chair in European Politics and History at the University of Victoria. You can reach Oliver for comments via This email address is being protected from spambots. You need JavaScript enabled to view it..

See also the recent CTV News video clip "Nobel Peace Prize Awarded to EU" with Achim Hurrelmann, Carleton University. EUCAnet database lists over 50 EU experts in Canada.

Dr. Oliver Schmidtke and Dr. Achim Hurrelmann are part of a cross-Canada network of experts working on European policy issues, the Strategic Knowledge Cluster Canada-Europe Transatlantic Dialogue.

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