|
| 'Eurozone crisis may lead to another banking upheaval' |
| Press Trust of India / Mumbai Jun 10, 2010, 19:39 IST |
|
The ongoing turbulence in the Eurozone can lead to a second banking crisis due to the weakness in the financial sector of Europe and the US, an expert said today.
"The situation is very serious. The fiscal crisis can lead to a second banking crisis worldwide. Even smaller issues can shake the banking system in the US and the EU and everywhere. It is far from being healthy," online foreign exchange trading service provider Alpari (UK) CEO Andrey Vedikhin told PTI on the sidelines of a function held by the company's Indian arm to launch exchange-traded currency for local markets.
"World-wide, toxic assets are in the range of $10 trillion, which will be able to destroy the whole financial system in the world," he said.
The media as well as governments concerned are trying to not spread panic in this regard to save the Eurozone and the world from a bigger financial crisis, he said.
"If everybody panics, worse can happen. Now, reports are there about the crisis spreading to more countries. Banks are now looking for funds from governments. But the governments, themselves, are in trouble," he said.
According to Vedikhin, keeping all the countries together within the Eurozone is the only way to overcome the crisis. "But chances are there for a split within the Eurozone," he said.
Many countries that have higher fiscal deficit are forced by bigger economies like Germany and France to lower it through lesser spending on the public sector, he said.
"This move will lead to job losses and, subsequently, a series of defaults. The unemployment rate in the EU was the highest last week," Vedikhin said.
According to him, banks from strong economies such as Germany or France have greater exposure to the trouble-ridden Eastern Europe.
"A few years ago, there was a bubble in these countries. Without realising that, banks from stronger economies in Europe invested heavily there. Now the bubble is gone. Things went wrong in these countries and the banks are affected," he said.
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
|
Content Guide
