Bonds show muted reaction to German vote

Australian bonds have opened largely unchanged after Germany's parliament passed a crucial vote to increase its contribution to the European bailout fund, aimed at avoiding a eurozone recession.

Of 611 German MPs present, 523 voted in favour, meaning that Germany in the future will be guaranteeing loans to the bailout fund, the so-called European Financial Stability Facility, or EFSF, of up to 211 billion euros ($A294.57 billion) rather than 123 billion euros so far.

Funds Injection not panacea for ills of world economy

German lawmakers are expected to vote for a bigger bail-out today. However, the vote by the biggest European nation to boost the firepower of the European Financial Stability Facility (EFSF) alone will not permanently end the euro-zone debt woes, especially if European Union leaders continue to avoid the painful but necessary process that Asian countries underwent following the 1997 currency crisis.

Kasikornbank's market and economic research chief Kobsidthi Silpachai said both currency crises showed the dark side of currency peg and currency pool, which - for stability of their currencies - demanded that the countries lose their autonomy in monetary and fiscal management to the currency host country's authorities.

Merkel dismisses talk of increasing EU stability facility

Ahead of talks in Berlin last night, Greek prime minister George Papandreou insisted his government was making a “superhuman” reform effort and warned Germans that sniping about Greece was “frustrating”.

“After this period of pain, I promise you that we Greeks will soon fight our way back to growth and prosperity,” he told the Federation of German Industries. “If [Greek] people feel only punishment and scorn, this crisis will not become an opportunity – it will become a lost cause.”

Austrian finance minister: Debt forgiveness for Greece a ‘very last’ option.

VIENNA — Austria’s finance minister says she considers forgiving Greece part of its multibillion euro debt only a “very last” option for eurozone nations.

Maria Fekter also says such a move could not be implemented until next year when rules governing such a procedure come into effect.

EU fund could be expanded

EU monetary affairs commissioner Olli Rehn has said talks are under way to expand the region’s bailout fund, the European Financial Stability Facility (EFSF), so that it could insure trillions of euro in debt as it seeks to get on top of the euro zone financial crisis.

The International Monetary Fund annual meetings wrapped up in Washington yesterday with widespread concern over the euro zone sovereign debt crisis, but no immediate consensus on the solution.

‘Barrier’ Around Greece Needed: Merkel

German Chancellor Angela Merkel said euro-region leaders must erect a firewall around Greece to avert a cascade of market attacks on other European states that would risk breaking up the currency area.

Expanding the powers of the region’s rescue fund, the European Financial Stability Facility, as agreed by European leaders in July is necessary to avoid Greece’s problems from spilling over to other countries, Merkel said late yesterday on ARD television. The fund’s permanent successor, due to take effect in mid-2013, is needed “so we can in fact let a state go insolvent” if it can’t pay its bills.

40% of small businesses posting losses: Reserve Bank

The share of small unlisted firms making losses remains at above average levels, with about 40% of firms with assets under $1 million reporting losses in 2010 and 2011, according to figures from the Reserve Bank.

This is well above the 25% average over 2006 to 2008.

Releasing its Financial Stability Review, the central bank said while Australian businesses were better placed to deal with any downturn because they had had deleveraged during the GFC, it remained unclear how the European sovereign debt crisis and anaemic growth in the US would play out in the short-to-medium term.

ESRB says EU financial stability at risk, hurts growth

The knock-on effects from the European sovereign debt crisis have led to considerably higher risks of financial instability in Europe, the continent's super-watchdog, the European Systemic Risk Board said on Wednesday.

"Risks to the stability of the EU financial system have increased considerably," the ESRB said in a statement.

"The high inter-connectedness in the EU financial system has led to a rapidly rising risk of significant contagion. This threatens financial stability in the EU as a whole and adversely impacts the real economy in Europe and beyond."

Standard Chartered CEO: Financial Stability Still In The Distance

WASHINGTON (Dow Jones)--The Group of 20 industrial and developing nations should focus more on new threats to financial stability rather than look backward for the reasons that caused the financial crisis, Peter Sands, chief executive of Standard Chartered PLC (SNTDF, STAN.LN), said Friday.

"Clearly we haven't achieved financial stability.... There has been too much fighting the last war rather than dealing with the threats facing us going forward," Sands said at a panel in Washington assessing the work of the Financial Stability Board, the body that advises the G-20 on financial reform.

Fed’s Dudley Says Financial Stability Essential to Foster Economic Growth

Federal Reserve Bank of New York President William C. Dudley said the “unusually anemic” U.S. economic recovery from the credit crisis highlights the need for a regulatory overhaul to ensure financial stability.

“We must keep pushing this agenda forward and not be deterred by those that defend the status quo,” Dudley, 58, said today in a speech in Washington. “The extraordinarily poor economic outcomes we see today underscore the importance of building a financial system that is resilient in its ability to provide credit to households and business throughout the business cycle.”

Euro Stability Fund Will Pass: German Minister

Angela Merkel's coalition partner, whose party has formed the main political opposition to the extension of the European Financial Stability Facility within Germany, told CNBC Wednesday that he believes the new EFSF measures will pass next week.

Vice-chancellor and economy minister Philipp Roesler's remarks followed grumbling from his conservative party in recent months about the cost of bailing out Greece.

ESRB says EU financial stability at risk, hurts growth

FRANKFURT, Sept 21 (Reuters) - The knock-on effects from the European sovereign debt crisis have led to considerably higher risks of financial instability in Europe, the continent's super-watchdog, the European Systemic Risk Board said on Wednesday.

"Risks to the stability of the EU financial system have increased considerably," the ESRB said in a statement.

IMF Says Financial Stability Risks Have “Sharply” Risen

Financial stability risks have risen “sharply” in recent months, as slower economic growth, market turbulence in Europe, and the credit downgrade of the United States have weighed on the global financial system, according to new analysis by the International Monetary Fund (IMF).

The IMF said in its latest Global Financial Stability Report that “financial markets have begun to question the ability of policymakers to command broad political support for needed policy actions.” According to the report, balance sheets are “strained by mounting debt or assets that have lost value. ” It added that “the lack of progress to repair balance sheets has raised concerns about the financial health of governments in advanced economies, banks in Europe, and households in the U.S.”

BRICS countries bought EFSF debt: report

The BRICS emerging market powerhouses have already bought debt through the European Financial Stability Facility (EFSF) and could buy more, a potential help to struggling euro zone economies, a Brazilian newspaper reported on Monday.

"We're very pleased to see already some BRICS countries investing in our debt," Christophe Frankel, chief financial officer of the EFSF, told Valor Economico, Brazil's leading financial daily.

Financial Stability Rating® of Southern Title Insurance Corporation Withdrawn

Demotech, Inc. has withdrawn the Financial Stability Rating® (FSR) of A, Exceptional, assigned to Southern Title Insurance Corporation. This action was taken subsequent to the review of financial information and conversations with management. The Company has voluntarily suspended issuance of new policies and is focusing on the resolution of defalcations and claims received on previously issued policies.

Wen urges fiscal, financial stability in U.S.

DALIAN, Sept. 14 (Xinhua) -- Chinese Premier Wen Jiabao on Wednesday urged the United States to maintain fiscal and financial stability to protect investors' interests.

"We hope the U.S. will carry out appropriate economic policies and maintain fiscal and financial stability to protect the interests and confidence of investors," Wen said at the opening of the World Economic Forum's annual meeting in China's northeastern city of Dalian.

Central banks must consider foreign economies: report

(Reuters) - Central banks do not operate in a vacuum and must be mindful of the effects of their policies on other countries, a panel of top economists said on Tuesday.

In a Brookings Institution report that hinted at criticism of the Federal Reserve, the experts argued that spillover effects are important, and called for the formation of an international group to monitor them.

Geithner to urge bigger EFSF, rapid action: source

BRUSSELS (Reuters) - Treasury Secretary Timothy Geithner is likely to urge euro zone finance ministers on Friday to speed up ratification of changes to their bailout fund and consider boosting its size, an EU source said on Tuesday.

The official said Washington was worried that the euro zone was not acting fast enough to enhance the EFSF fund and that the stability of the global financial system was at stake.

Demotech Affirms Financial Stability Ratings® Assigned to National Title Underwriters

COLUMBUS, Ohio, -- Based on its review of the second quarter 2011 statutory financial statements, Demotech, Inc. has affirmed the Financial Stability Ratings® (FSRs) assigned to the companies within the Chicago/Fidelity Group, the First American Group, the Old Republic Group and the Stewart Group.

Slovak govt approves EFSF boost, risks from parlt

BRATISLAVA, Sept 7 (Reuters) - The Slovak government approved a plan on Wednesday to strengthen the euro zone's joint bailout fund, but it will face an uphill battle in parliament, whose consent is required to conclude the ratification process.

Euro zone leaders agreed in July to allow the European Financial Stability Facility (EFSF) to give precautionary loans to countries under attack in financial markets and, in some cases, to buy sovereign bonds.

Merkel Battles Bailout Blues

BERLIN—Signs are increasing that German Chancellor Angela Merkel may have to risk her political career to make sure that Germany delivers on its commitment to expanding the euro zone's bailout capacity.

Two mock votes among the center-right parties of the federal government late Monday suggested that she can scarcely rely on their support alone to guarantee the passage of a vote that would increase the lending capacity of the European Financial Stability Facility and allow it to take on the role of lender of last resort from the European Central Bank.

ECB tells EU to step up reforms, says bond-buying temporary

PARIS, Sept 5 (Reuters) - The current and incoming head of the European Central Bank demanded on Monday that European governments quickly implement a strengthening of a regional bailout fund and press ahead with wider reforms.

With some euro zone states dragging their heels in approving the reform of the European Financial Stability Facility agreed in July, ECB President Jean-Claude Trichet and Bank of Italy Governor Mario Draghi warned any delay risked worsening the euro zone's debt crisis.