Focus Europe - Policy momentum

Table of Contents
Euro Policy Response Accelerating .................. Page 03
ECB: 12-mth tenders, covered bonds and a rate cut
signal ................................................................ Page 07
Euro Sovereign Events: What to watch ........... Page 09
Italy: Moody’s downgrades Italy by three notches
.......................................................................... Page 11
Inflation ............................................................ Page 14
UK: Getting ahead of the curve ........................ Page 15
Hungary: October 2008 versus October 2011 Page 19
Rate Views ...................................................... Page 22

. The IMF head, in her speech at Jackson Hole in
August, has likely laid out the blue print for an
acceleration in the European crisis resolution
process by refocusing energies on recapitalizing
the banks. Judging by the public statements from
diverse European authorities, it seems that a
concrete process may start soon.
. There are still numerous points to sort out. The
Europeans seem to hesitate between a fully
integrated approach – where the EFSF is the sole
supplier of funding – and a more decentralized
option, where EFSF funding is reserved to the
struggling countries. In our view, the latter is
probably more practical from a financial point of
view.