Bring the IMF to Europe…literally

Bring the IMF to Europe…literally

Europe could bring not only the IMF money to the old continent, but the institution as well. Just one show of Europeanism would suffice.

It was bound to happen eventually. The share of emerging markets in the world economy is much higher than some ten years ago, let alone half a century ago. Despite their increasing weight, it was as the time stood still at international institutions such as the International Monetary Fund and the World Bank. Sure, last year some emerging markets (by the way, don’t we need another term, as those markets have emerged by now?) got a few more votes at the IMF, but it was nothing spectacular.

It is a different story at the World Bank though. Voting shares of some emerging and developing countries have increased sharply under the new agreement. China now has more to say than Germany, Great Britain or France. In the near future, the gap between young brides in the world economy, i.e. countries like China, and the three grand old ladies of Europe will become even larger. Even with the new agreement, the voting share of emerging markets remains too low given the (fast increasing) size of their economies.

Dear old Europe

Let’s turn for a while to Europe. Betting on the euro area to fall apart (and hence the euro to disappear) somewhere in the not-so-distant future or at least to remain stuck in the mud for a long time would probably yield more than betting that the euro area will revitalize, solve all of its structural problems (and there are a lot of those) and proceed full speed ahead. Reality trumps sentiment shall we say.

Don’t worry, I did not mix up two different pieces, it’s all related to the changes at the World Bank and the IMF.

Forgive me for having to severely simplify things, but the core problem of the euro and the euro area is that it is a monetary, not a political or a fiscal union. Now, when people talk about a political or fiscal union, we all immediately think of a common economic policy, maybe even an economic government with a larger budget for the euro area or even the EU and some kind of structural fiscal transfer mechanism to pump the money from the relatively well-off euro area regions to the weaker ones when economic situation differs.

Union

But another field a political union would be demonstrated is the representation beyond the borders of the euro area. However, there is and has never been something like an European seat on the IMF board or at the World Bank. The farthest the Europe has come is a seat for a representative of the European Central Bank at the IMF. But he (it has always been a man) has no right to vote and is only allowed to participate in those parts of the meeting if the Board that are on the euro area. As soon as that part is dealt with, he has to go and close the doors behind him.

The European Parliament has called for one European representative in important international organizations. Jean-Claude Trichet, President of the ECB has stated previously that the euro area should have its own man/woman at the IMF and that he/she would love to see that process proceeding faster than has been the case.

Climate change

What the consequences are of Europe not willing or being able to speak with one voice, has been shown at the meeting on the climate change in Copenhagen in December last year. The US, China, India, Brazil and some other big countries sat down together to hammer a deal. Not a single European nation was present. Europe can only exert influence on world policies if it speaks with one voice.

With the discussions on the future of the euro and the increasing chance of the euro area breaking up in the (near?) future, Europe risks becoming completely marginalized on the world stage. Others will meet and decide on important issues and Europe, instead of being one of the decision makers, will become a decision taker.

Good ol’ European disagreements

If the euro area member states were to announce that they withdraw from the IMF as individual states and join the IMF as ‘euro area’ with a common seat at the IMF Board, it would be good news for international movers as the whole IMF would have to move from its current headquarters in Washington to the euro area. Article 13 of the Articles of Agreement of the International Monetary Fund is very clear on the question where the headquarters must be located. ‘The principal office of the Fund shall be located in the territory of the member having the largest quota, and agencies or branch offices may be established in the territories of other members.’ Together, euro area nations would have the largest share of votes, larger even that the US.

But then again, knowing the Europeans, the IMF would probably stay in the ‘new world’ because how likely is that the Europeans would agree on where in the euro area to put the IMF headquarters. I mean, often Europeans even disagree to agree to disagree.

What’s next?

This article was written by Edin Mujagic, a monetary economist at the ECR Euro Currency Research in Utrecht, The Netherlands and at Tilburg University. To receive ECR’s reports on an evaluation basis, and hear what the rest of our analysts have to say, simply request a free trial from ECR via o.payne@ecrresearch.com.

 

 

Algarve Holidays

If you really have a passion for ‘Mediterranean Style’ holidaying then go for a holiday in Algarve. With picturesque fishing villages, mountains, golden sand long beaches, castles, lakes, rivers, villas and other hot spots, Algarve in Portugal is really a perfect holiday destination for you in the lap of nature!

Whatever may be your wish in opting for holidays in Algarve, it is fulfilled by the wonderful place full of happening things – large luxurious hotels, comfortable and affordable resorts, endless beaches, breathtaking nightlife, villas with swimming pool, superb shopping centers, wonderful Mediterranean cuisines, health clubs, and above all the homely comforts in a foreign land!

The weather is usually excellent when winter recedes and there is advent of spring. This is the peak season of Algarve Holidays. Though tourists flock in full swing throughout the year, the pleasant spring adds a different texture to the place. Whether you move east of Faro or to the West Atlantic Coasts or to the interior of the place, Algarve has something for you.

How to Get To Algarve?

The southern most region of Portugal is well connected by air, land and water. You can reach by air to the Faro International Airport. It connects all major cities in Europe. The place is also connected well by bus plying on different routes from nearby towns and cities. Bust routes also connect the international Faro airport, Olhao and Lagos to some Spanish cities like Huelva and Seville. The Algarve has a good network of fast moving trains to other parts of Portugal and nearby countries.

If you wish to make your journey to Algarve more exciting, you can take the sea route by ferry which connects Algarve to Spanish cities like Vila Real de Santo Antonio and Ayamonte.

Algarve Beaches and Other Attractions

Since the place is situated on the coast of Atlantic Ocean, you can expect great beach holidays in Algarve. The sandbanks and islets, interwoven with twisting channels and rivers, fishing villages, great relaxing holiday resorts make this Portuguese destination quite charming.

A few lovely and interesting beaches of Algarve are as follows:

Praia Verde: Located in the west of Monte Gordo, has a wonderful line of bushes and trees along the endless beach. A suitable place for family and children to chill out and rock!

Praia Ilha De Tavira: This beach is like a jewel in the crown of the beaches in Faro. The attractive sandy bar has some wonderful events to do besides soaking under the sun sipping local blended beer or refreshing drinks. Take a walk along the beach and forget all the worries of life!

The other important beaches in the Algarve are A praia Do Barril, Praia Da Armona, Praia Da Ilha De Faro, Praia De Garrao, Praia Da Falesia, Praia Da Gale, Praia Da Rocha, Praia De Alvor and Meia Praia.

The place is great to go around in local transport like buses, trains and rented cars. Do not miss the attractions of the place like Lagos city which has historical importance. It also has a local market to buy wonderful items. Eat your heart out in the restaurants in Lagos offering wonderful delicacies.

Visit the red stone castle in Silves to have a feel of those old Portugal days. You will love the narrow lanes, small shops, some rural touch and the excellent nature of the place.

Where to Stay in Algarve?

The Algarve is one of the best places to stay in Europe. Besides wide range of luxury and affordable hotels, you can stay in villas which give you home comfort with facilities like swimming pool, kitchen to cook your food and even cars to roam around.

Stock Market History ‘ Where It Started

The stock market history is very long though the first market was not called such. The very first brokers were in France during the 12th century when individuals were trying to regulate the debts that were occurring in the agricultural community. These men traded in debts though the first formal trading house did not occur until the 13th century somewhere in Bruges.

 

The very first government securities were not traded until the 13th century in Venice. Several other cities in Italy also had success with government securities because these cities were not government by a duke but by a council. In many other places in Europe government securities could not be traded due to the present type of government.

 

The Dutch soon started their own stock companies in which they let share holders invest in different businesses and the shareholder would then be able to share in that businesses profits or losses. The very first share was available in 1602 by the Dutch East India Company through the Amsterdam Stock exchange.

 

The Amsterdam Stock Exchange was really the first stock market in the world and it was here that option trading, debt equity swaps, short selling, speculative instruments, merchant banking and unit trusts all developed. They also were the first to offer bonds and having continuous trading.

 

Since the Amsterdam exchange other developed countries have created their own stock exchanges such as the United States, the United Kingdom, Japan, China, India, Canada, Germany, the Netherlands and France.

 

The stock market was crucial for business to expand as it was a fast way to gain capital. However there is always risk with investments as the expansion may not be a success. The market is one of the most liquid investing markets as you can make or lose money very fast when compared to other markets.

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