Last year's European stress tests were exposed as all but pointless by the Ireland bank crisis. This time, if they are not a real test of credibility, all of Europe will pay the price.
PARIS – This time is for real. The stress tests scheduled to be performed on European banks over the next four months must be stringent – and there will be no third chance.
This time around, tests need to be more than just a big marketing campaign trying to convince investors that European banks are solid. Unlike the public stress tests performed on Wall Street in the spring of 2009, which they were supposed to emulate, last July's stress tests were far too mild -- and in the end, useless. The utter inefficiency of the European Union tests was underscored at the end of last year, when Irish banks -- which had all managed to squeeze over the bar -- crumbled, bringing Ireland's economy to its knees with them.
The stakes for the EU in this challenge are extremely high. In order to be credible, this second round of stress tests on banks needs to be given all the means necessary. First, the tests must test the resilience of banks in the event of a sharp macroeconomic slowdown (this already seems to be the case); then, the tests must be able to accurately evaluate liquidity risks; and finally, the exercise must envisage the creation of an immediate rescue mechanism for the institutions thought to be the weakest.
But if Europe really wants to regain market confidence, it will have to stop procrastinating on the delicate matter of the euro zone sovereign debt rating. For the moment, it seems that the exercise will not take into account the risk of a Union European member defaulting. But it will definitely have to consider debt restructuring in the case of ailing countries. It is better to admit, for example, that the Greek debt is worth 70% of its value than to deny the obvious, and let investors get away with setting their own rules. Regulators should not be afraid to do this, especially since the impact the tests will have on banks' solvency will be limited: only banks selling their debt will be affected by the restructuring.
But the decision does not only depend on bank regulators, it is a matter of European governance. Alongside the future missions of the European Financial Stability Fund, and the conditions regulating the sovereign debt renegotiation starting in 2013, efficient stress tests could ultimately prove to be one of the keys to solving the entire euro zone crisis. The European summit taking place Friday should confront this head on.
Read the original article in French
A court in Spain usurps custody of the one-year-old boy living with his mother in the "deep" part of the Galicia region, forced to instead live with his father in the southern city of Marbella, which the judge says is "cosmopolitan" with good schools and medical care. Women's rights groups have taken up the mother's case.
A Spanish court has ordered the withdrawal of a mother's custody of her one-year-old boy because she is living in the countryside in northwestern Spain, where the judge says the child won't have "opportunities for the proper development of his personality."
The case, reported Monday in La Voz de Galicia, has sparked outrage from a women's rights association but has also set off reactions from politicians of different stripes across the province of Galicia, defending the values of rural life.
Judge María Belén Ureña Carazo, of the family court of Marbella, a city on the southern coast of 141,000 people, has ordered the toddler to stay with father who lives in the city rather than with his mother because she was living in "deep Galicia" where the child would lack opportunities to "grow up in a happy environment."
Front page of La Voz de Galicia - October 25, 2021
Front page of La Voz de Galicia - Monday 25 October, 2021
Better in a "cosmopolitan" city?
The judge said Marbella, where the father lives, was a "cosmopolitan city" with "a good hospital" as well as "all kinds of schools" and thus provided a better environment for the child to thrive.
The mother has submitted a formal complaint to the General Council of the Judiciary that the family court magistrate had acted with "absolute contempt," her lawyer told La Voz de Galicia.
The mother quickly accumulated support from local politicians and civic organizations. The Clara Campoamor association described the judge's arguments as offensive, intolerable and typical of "an ignorant person who has not traveled much."
The Xunta de Galicia, the regional government, has addressed the case, saying that any place in Galicia meets the conditions to educate a minor. The Socialist party politician Pablo Arangüena tweeted that "it would not hurt part of the judiciary to spend a summer in Galicia."
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