Finance ministers from the world’s largest economies concluded a meeting on Saturday with a pledge to take “all necessary actions” to stabilize global financial markets and ensure that banks are well capitalized.
The Group of 20 which met in Paris over the weekend backed European leaders efforts to act decisively this week to find a concrete solution to the debt crisis and to devise a plan to recapitalize the region’s banks and save Greece from a default.
“We will ensure that banks are adequately capitalized and have sufficient access to funding to deal with the current crisis,” the Group of 20 finance ministers said in a statement issued after a two-day meeting in Paris.
The focus turns to the EU summit on Sunday, when EU leaders are expected to deliver the crisis plan.
Euro is expected to remain steady and hold onto gains made last week, the biggest gains in nine months. As more details emerge later in the week ahead of the summit, this will give more direction to price action. On Thursday, more details on the size of the new haircuts on Greek debt could be available when the troika (IMF-ECB-EU) is expected to come with its latest report on Greece. If haircuts are larger than expected, and more than 50 percent, this may fail to appease concerns about the sustainability of the Greek debt and consequently weaken euro.
Also if Europe disappoints this weekend in Brussels, this could risk hurting market sentiment for a long time and investors will lose confidence in European leaders finding a solution to the debt crisis, and damaging euro further.