Backing bond market intervention by the European Central Bank, the Organisation of Economic Cooperation and Development (OECD) said on Friday that Europe must seize a “window of opportunity” offered by the relative recent calm of financial markets to tackle the simmering euro zone debt crisis.
“I think it is now time that the European authorities push strongly toward a solution,” said Pier Carlo Padoan, chief economist of the Paris-based organization.
The OECD represents a respected outside voice on how best to tackle the two-year crisis, and his comments come just days before the European Central Bank (ECB) meets to weigh controversial bond market purchases.
Padoan said the OECD had been braced for a very rocky August for euro zone financial markets, particularly for Spanish and Italian bonds, but this volatility had not emerged and stock markets were in fact now stronger.
“It is time to exploit what seems to be a credit-opening from markets on the European situation, so it is very important that authorities exploit this window of opportunity,” he said.
Padoan, speaking on the sidelines of the annual Jackson Hole policy retreat hosted by the Kansas City Fed, also made clear his support for bond-market buying by the ECB.
With less than a week to go before the ECB could decide to intervene directly to prop up Spanish and Italian bond markets, Padoan said he did not believe the wide bond spreads of weaker southern European nations reflected economic fundamentals, but rather the fear that the euro zone could break up.
“If that is correct, then the response to that spread has to deal with reassuring markets that the euro zone will not break up, in addition to the fact that those countries must continue with their structural adjustments,” he said.
“So intervening in bond markets, it is a very important temporary backstop to a wider strategy,” he said.
“If the ECB comes up with proposals that provide concrete content to the ideas about support of bond markets, that would be extremely important,” he said.
The ECB is set to meet on Thursday to review a proposal to buy Italian and Spanish bonds in order to gain breathing space for euro zone leaders to figure out a longer-term response to the euro zone’s sovereign debt woes.
The plan has met stiff opposition from Germany’s Bundesbank, whose president, Jens Weidmann, was also attending the conference in Grand Teton National Park in Wyoming.
Weidmann declined to comment to reporters about a German press report that he had considered resigning over the issue.
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Huawei Technologies Co’s (華為) latest smartphones carry a version of the advanced made-in-China processor it revealed last year, results from an independent analysis showed. This underscored the Chinese company’s ability to sustain production of the controversial chip. The Pura 70 series unveiled last week sports the Kirin 9010 processor, research firm TechInsights found during a teardown of the device. This is a newer version of the Kirin 9000s, made by Semiconductor Manufacturing International Corp (SMIC, 中芯) for the Mate 60 Pro, which had alarmed officials in Washington who thought a 7-nanometer chip was beyond China’s capabilities. Huawei has enjoyed a resurgence since
purpose: Tesla’s CEO sought to meet senior Chinese officials to discuss the rollout of its ‘full self-driving’ software in China and approval to transfer data they had collected Tesla Inc CEO Elon Musk arrived in Beijing yesterday on an unannounced visit, where he is expected to meet senior officials to discuss the rollout of "full self-driving" (FSD) software and permission to transfer data overseas, according to a person with knowledge of the matter. Chinese state media reported that he met Premier Li Qiang (李強) in Beijing, during which Li told Musk that Tesla's development in China could be regarded as a successful example of US-China economic and trade cooperation. Musk confirmed his meeting with the premier yesterday with a post on social media platform X. "Honored to meet with Premier Li