22 JUN 2011
Major UK banks have dramatically reduced the amount of unsecured lending they can provide to eurozone banks. With fears of Greece defaulting on its obligations, Britain is seeking for safer bills to deal with eurozone countries.
The UK banks of Barclays and Standard Chartered, have cut their exposure to the eurozone, withdrawing billions of pounds from the inter-bank lending market in recent weeks, reports The Telegraph.
British banks have a relatively small exposure to Greek debt, UK treasury minister Mark Hoban said on Monday addressing the British Parliament. While British banks have $4 billion in exposure to Greek sovereign debt, it is up to $16 billion for France and $20 billion for Germany, as estimated by Dow Jones.
Member of the European Parliament William Dartmouth from the UK Independence Party says there must be a distinction between the EU and the eurozone, which “was always a project driven by politics, not by economics.”
EU officials have got not just cold, but frozen, feet about bailing Greece out, because however small an economy it is, the bailout plan means spending €70 billion, with more probably to come in the next 12 months – and taxpayers from northern Europe, Germany and Finland in particular, do not like it at all.
“The terms of trade and economic logic are that Greece would default,” predicts William Dartmouth. “The markets are signaling default for Greece.”
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