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EFFECTS OF CRISIS ON EUROZONE EFFECTS OF CRISIS ON EUROZONE

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EFFECTS OF CRISIS ON EUROZONE EFFECTS OF CRISIS ON EUROZONE

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EFFECTS OF CRISIS ON INDIAEFFECTS OF CRISIS ON INDIA

Euro crisis may trigger more capital flows into India: RBI

Money probably tries to come to places where it gets better returns. So from the point of view of capital flows, you do have the likelihood of more uncertainty in the rest of the world and therefore more money coming to India

The quantum of impact of Euro zone crisis on markets here is yet to be measured….

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EURO CRISIS IS HURTING EURO CRISIS IS HURTING INDIA’S EXPORTSINDIA’S EXPORTSThe recent development in the euro zone has heightened uncertainty in financial markets. India's short-term growth prospects have been adversely impacted.If the euro zone crisis prolongs, growth in

exports will be impacted.

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Saving The Euro From CrisisSaving The Euro From Crisis

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Solution to Euro CrisisSolution to Euro Crisis

The economy of the 17 countries in the euro currency union is almost stagnant, growing just 0.2% in the third quarter, with unemployment at 10.3%.

EU emergency measures

1.European Financial Stability Facility (EFSF):

On 9 May 2010, the 27 EU member states agreed to create the European Financial Stability Facility, a legal instrument[aiming at preserving financial stability in Europe by providing financial assistance to eurozone states in difficulty

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Solution to Euro CrisisSolution to Euro Crisis

• The EFSF can issue bonds or other debt instruments on the market with the support of the European Central Bank to raise the funds needed to provide loans to euro zone countries in financial troubles, recapitalize banks or buy sovereign debt

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Solution to Euro CrisisSolution to Euro Crisis

2.European Financial Stabilization Mechanism (EFSM)

On 5 January 2011, the European Union created the European Financial Stabilisation Mechanism (EFSM), an emergency funding programme reliant upon funds raised on the financial markets and guaranteed by the European Commission using the budget of the European Union as collateral.

The Commission fund, backed by all 27 European Union members, has the authority to raise up to €60 billion and is rated AAA by Fitch, Moody's and Standard & Poor's.

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HISTORIC EU SUMMIT ON DECEMBER HISTORIC EU SUMMIT ON DECEMBER 9, 20119, 2011

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HISTORIC EU SUMMIT ON DECEMBER HISTORIC EU SUMMIT ON DECEMBER 9, 20119, 2011

Important steps taken at the EU SUMMIT

o Intergovernmental treaty that would require them to enforce stricter fiscal and financial discipline in their future budgets.

o All 17 members of the European Union that use the euro agreed to the new treaty, along with six other countries who wish to join the currency union one day.

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Important steps taken at the EU SUMMIT

• Two countries, the Czech Republic and Sweden, said they would want to talk to their parties and parliaments at home before deciding.

• Hungary said it wanted to examine the details, leaving Britain isolated.

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Important Steps Taken at the Euro SummitImportant Steps Taken at the Euro Summit

• A permanent 500 billion euro European Stability Mechanism would be put into effect a year early, by July 2012, and for a year, would run alongside the existing and temporary 440 billion euro European Financial Stability Facility, thus also increasing funds for the firewall.

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Important Steps Taken at the EU SUMMITImportant Steps Taken at the EU SUMMIT

• The leaders agreed to provide an additional 200 billion euros to the International Monetary Fund to help increase a "firewall" of money in European bailout funds to help cover Italy and Spain.

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What I expect

from all heads of

governments that

they don’t come

saying what they

cannot do but

what they will do

for Europe.

JOSE MANUEL BARROSO

European Commission

President

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•THANK YOUFEEL FREE TO ASK ANY

QUESTIONS AT END OF PRESENTATION