EU Emergency Funding Action (Hypothetical)

We would ask other member states their opinions on the following proposal:-

EU Emergency Funding Action (Hypothetical)
Submitted by: The Hellenic Republic (Greece); Backed by: Czech Republic.

In view of recent troubles in the Eurozone, the European Central Bank (ECB) shall be allowed to purchase government bonds from Eurozone countries. The ECB shall be limited to holding 5% of each government's total debt; a special exception will be made for Greece, which can have up to 25% of government debt bought. For the immediate future, in addition to having the target of keeping inflation rates low the ECB shall also have the target of keeping government bond yields at a reasonable level.

OOC: This proposal has been submitted as a last ditch effort - from within the EU Bloc - to help both Greece and other struggling Eurozone member states. We would like other EU Bloc members to give their opinions on the proposals.

Reply 1

stanlas2

The Czech Republic fully supports these plans. We join Greece in asking for other members of the Bloc to voice their opinions and suggestions

Reply 2

Nørgaard

6

Although not a user of the single currency, Bulgaria fully supports the Emergency Funding proposal.

OOC: My Economics knowledge is REALLY poor, so I apologise in advance - do government bonds have to be paid off by a certain date? If so, what limit would be set on any countries applying for one? (of course, Greece would be a special exception again in this case).

Reply 3

thunder_chunky

19

Original post by Aek-94

We would ask other member states their opinions on the following proposal:-

OOC: This proposal has been submitted as a last ditch effort - from within the EU Bloc - to help both Greece and other struggling Eurozone member states. We would like other EU Bloc members to give their opinions on the proposals.

[ooc] Was this actually meant to be a hypothetical or just an idea for one? Or a side situation to the hypothetical? Only the SG or deputy SG can start, run and end hypes. [/ooc]

Reply 4

username865376

OP

2

Original post by thunder_chunky

[ooc] Was this actually meant to be a hypothetical or just an idea for one? Or a side situation to the hypothetical? Only the SG or deputy SG can start, run and end hypes. [/ooc]

OOC: I know they can. This is an idea which the Czech representative (stanlas2) and myself put together, as a solution for the hypothetical on the Eurozone. I also messaged the EU Secretariat (Morgsie) about this possible solution, and he said it'd be best to open a new thread for the idea, so I did.

Reply 5

thunder_chunky

19

Original post by Aek-94

OOC: I know they can. This is an idea which the Czech representative (stanlas2) and myself put together, as a solution for the hypothetical on the Eurozone. I also messaged the EU Secretariat (Morgsie) about this possible solution, and he said it'd be best to open a new thread for the idea, so I did.

[ooc] That's fair enough, I applaud the creativity but in the future please let me know first. And if you have any questions or are unsure at any point just ask me. It's what I'm here for. Well....partly. [/ooc]

Reply 6

zaliack

16

Although not part of the EU, the Republic of Malawi questions why there should be a drastic exception for Greece, when several other Member States are falling into similar positions as them.

Reply 7

username865376

OP

2

Original post by zaliack

Although not part of the EU, the Republic of Malawi questions why there should be a drastic exception for Greece, when several other Member States are falling into similar positions as them.

OOC: I'm not very good at economics but I'll attempt to answer your question.

(In character as: Greece)

Thanks for your question.

Although we understand that several other member states in the south of the Eurozone are also facing similar problems to that of Greece, we believe that Greece is a special circumstance. Unlike, for example: Spain, Portugal, Italy etc., Greece has fallen economically to a point were it is essentially beyond the ability to save without a dramatic expansion of the total debt that the ECB can hold.

Reply 8

bs12345

The Republic of Latvia believes this scheme is a good idea, but since our economy has great prospects for growth at this time, and we are not part of the Eurozone, we have no real interest in the benefits of this scheme.

Reply 9

Morgsie

7

Original post by bs12345

The Republic of Latvia believes this scheme is a good idea, but since our economy has great prospects for growth at this time, and we are not part of the Eurozone, we have no real interest in the benefits of this scheme.

The EU would like to remind the delegate from Latvia that Latvia may join the Euro in 2014

Reply 10

Birchington

20

OOC: Some great ideas being discussed here.

Reply 11

bs12345

Original post by Morgsie

The EU would like to remind the delegate from Latvia that Latvia may join the Euro in 2014

OOC: Sorry, obviously not enough research on my part! I have read lots about Latvia's overall economic resilience during the global economic downturn though. Since this thread is hypothetical, I assume I can pull out of joining the Euro?

Reply 12

username865376

OP

2

OOC: With the recent update on the Eurozone hypothetical here, I'll change this proposal soon.

Reply 13

username865376

OP

2

OOC: With the announcement in the hypothetical thread that Greece has now leave the Eurozone, and Spain on the edge of bankruptcy, I've changed some of the provisions outlined in this proposal. I'm not very good on the economics front, but I think this more or less takes into account both RL and hypothetical situations.

Updated
EU Emergency Funding Action
Submitted by: The Republic of Finland

In view of recent troubles in the Eurozone, the European Central Bank (ECB) shall be allowed to purchase government bonds from Eurozone countries. The ECB shall be limited to holding 5% of each government's total debt; a special exception will be made for the Kingdom of Spain, which can have up to 25% of government debt bought, and previously bailed out states, such as: the Republic of Portugal; and the Republic of Ireland which can have up at 15% of government debt bought. For the immediate future, in addition to having the target of keeping inflation rates low the ECB shall also have the target of keeping government bond yields at a reasonable level.

Reply 14

zaliack

16

The republic of Malawi would like to stress that member states should proceed with caution under these proposals

OOC: This proposal seems risque. The problem is, by holding such large amounts of money, someone HAS to pay. It'll either be the stronger countries - which will severely damage their economies, or it'll be the debtors - who will be rather angry, and wanting to make their money back (i.e they'll want bigger bond yields).

Also, to reduce bond yields will effectively mean that the ECB will have to start QE - and those effects are quite unknown, so it could either save the eurozone, or destroy it.

Reply 15

username865376

OP

2

Original post by zaliack

OOC: This proposal seems risque. The problem is, by holding such large amounts of money, someone HAS to pay. It'll either be the stronger countries - which will severely damage their economies, or it'll be the debtors - who will be rather angry, and wanting to make their money back (i.e they'll want bigger bond yields).

Also, to reduce bond yields will effectively mean that the ECB will have to start QE - and those effects are quite unknown, so it could either save the eurozone, or destroy it.

OOC: That's true. I guess I'll end this proposal, and wait for the alternate one which the Swedish representative is supposed to be bringing out this weekend.

Reply 16

zaliack

16

Original post by Aek-94

OOC: That's true. I guess I'll end this proposal, and wait for the alternate one which the Swedish representative is supposed to be bringing out this weekend.

OOC: For another proposal, I'd suggest that the ECB release it's own bonds. It seems like the most effective measure to me (although the Germans and the Brits would be furious! :tongue:

)

Reply 17

stanlas2

Original post by Aek-94

OOC: With the announcement in the hypothetical thread that Greece has now leave the Eurozone, and Spain on the edge of bankruptcy, I've changed some of the provisions outlined in this proposal. I'm not very good on the economics front, but I think this more or less takes into account both RL and hypothetical situations.

Updated
EU Emergency Funding Action
Submitted by: The Republic of Finland

In view of recent troubles in the Eurozone, the European Central Bank (ECB) shall be allowed to purchase government bonds from Eurozone countries. The ECB shall be limited to holding 5% of each government's total debt; a special exception will be made for the Kingdom of Spain, which can have up to 25% of government debt bought, and previously bailed out states, such as: the Republic of Portugal; and the Republic of Ireland which can have up at 15% of government debt bought. For the immediate future, in addition to having the target of keeping inflation rates low the ECB shall also have the target of keeping government bond yields at a reasonable level.

The Czech Republic can support this again.
Should anything be added about Greece? They are probably now experiencing massive inflation, a run on the banks et al and probably require some form of help.

Reply 18

Nørgaard

6

Original post by stanlas2

The Czech Republic can support this again.
Should anything be added about Greece? They are probably now experiencing massive inflation, a run on the banks et al and probably require some form of help.

It might be best to see how China, Russia and America deal with the Greek situation first - Buglaria feels now that Greece has left the common currency, preserving the status of other troubled countries and preventing further exodus should be top priority, unless Greece descends into a social/political/humanitarian crisis.

Buglaria would support the updated proposal, but instead waits with interest to hear the thoughts of the Swedish representative.