Greek Financial Minister George Papaconstantinou suggested on CNBC Tuesday that more regulation and transparency in the CDS market is needed, including banning of “naked” short selling – a practice that involves short-selling a security without borrowing it in the first place.
Papaconstantinou’s call came shortly after EU Commission President Jose Manuel Barroso told the European Parliament that “A new, adult reflection is needed on credit default swaps regarding sovereign debt”.
According to Papaconstantinou, “What has become very clear in this whole affair is that over and above the fiscal problems that any particular country has, in our case Greece. There are all kinds of questions about what kinds of use people make of things like CDS, credit derivative swaps in international markets, how opaque these markets are, non-transparent, how it’s not clear who’s trading what.”
Papaconstantinou also said that credit default swaps and derivatives can push countries, even those that are doing what they should be doing in terms of bringing their financial house in order, to the brink.
My 2 cents on this topic:
This isn’t going to work out for the Euro-Zone. In my opinion they made a huge mistake when choosing for one currency.
You can not have one currency, If all countries in the Euro_Zone keep there own governments.
Now every government/country has to be successfull to push the Euro up. Which is impossible, so the weaker countries will always pull the strong countries down.
If you have 1 currency you need ONE central government and one monetary pollicy. You would have to have a set up like the USA. 1 president leading all the separate states.
For Europe and the EUro the only way is down. THe issue that countries can not print more of their currency to solve or help with their deficit problem will show to be a economical fatality.