To try to enhance investor confidence, European banking authorities recently announced a requirement for a large number of euro-area banks to lift their core Tier 1 capital ratios to 9 per cent by mid 2012.1 It has been estimated that, other things equal, this would require about € billion of new capital.
Large and persistent current account deficits in a number of countries on the geographical periphery of the euro area are the result of a combination of strong growth in demand, higher than average inflation and deteriorations in price competitiveness during the first decade of monetary union.