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Could we see the set-up of a private sector European Recovery Fund?

A number of Europe's top bankers are currently in discussions regarding the potential creation of a private sector European Recovery Fund which could raise upwards of €20 billion a year to assist with future banking bailouts. It is believed that the significant investment required to fund the operation would effectively allow the banking arena to maintain independence from various governments within Europe and negate the need for government bailout funding in the future. But would this work?

While there is no doubt that the banking giants within Europe would rather maintain control of the sector in the event that future bailouts were required, whether the European Union would allow this remains to be seen. While the major emphasis would be on bailout funding, the idea for the European Recovery Fund would also see support offered in other areas of the financial arena such as changes in capital adequacy regulations and the ability for the fund to offer guarantees.

So far details of the proposition are relatively thin on the ground although we should see more information released into the public domain in the coming days and weeks. Whether the venture will actually get off the ground remains to be seen but the very fact that the banking arena is fighting back offers the potential for a very interesting discussion within the European Union.

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