The battlelines for the June 28 EU summit are being drawn with eurobills as one potential plan and allowing the EFSF/ESM to buy periphery debt as another. A third is a European Redemption Fund, which would finance any sovereign debt above 60 per cent of gross domestic product but under strict conditions.
A banking union will also be on the agenda.
With so many proposal and hurdles to overcome, it’s unlikely that anything will be hammered out in just over a week but in the past, the EU has been able to shock the market with broad proposals, which later unravel in the details. Unless the Fed steals away the punchbowl, markets could be set for a substantial relief rally.
