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UK suspends financial aid to Uganda

Reported by AAP
Sunday, November 18, 2012
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Britain has suspended all financial aid to Uganda over a corruption scandal in which millions in donor funds were embezzled in the office of the prime minister.

The central bank chief defended the currency as the recession-hit eurozone tried to contain a growing debt crisis, with Greece battling to avert default and Spain pondering a sovereign bailout.

"The future of the euro is absolutely clear cut," Noyer said in a speech to the annual assembly of Spain's Association of Financial Markets in the Spanish capital.

"I have absolutely no doubt that the euro will stay in the long term future," he added. "It is the natural continuation of the European Union, it was in the spirit of the founding fathers."

Noyer said the benefits of the single currency were "perfectly clear".

"People don't realise that if the euro disappears it will be an absolute disaster," he warned.

The French banking chief pressed European powers to set up a banking union as an urgent response to the region's financial crisis.

European leaders agreed in October to establish a regional banking supervisor in 2013, the first step towards a banking union that would allow the European Union to directly help troubled banks.

"We are moving towards a banking union, which was missing in the monetary union," Noyer said. "It is a crucial and urgently needed answer to the crisis," he added.

Noyer urged that the banking union be established "swiftly" to allow for a sustained return of confidence and stability.

Spain's eurozone's partners agreed in June this year to extend to Madrid an emergency rescue loan of up to 100 billion euros ($129 billion) to help its stricken banks.

The government says it expects to use about 40 billion euros of the available funds, money that will be added to its bulging public debt unless the EU is empowered to intervene directly to support the banks.

Now, Spain is pondering whether to apply to the eurozone's bailout fund for a sovereign rescue, which would open the way for the European Central Bank to buy Spanish bonds and curb Madrid's borrowing costs.

The ECB's offer to make unlimited purchases of stricken states' bonds if they accept strict conditions has brought down Spain's interest rates even before Madrid decides whether to seek the help.

The ECB mechanism amounted to a "massive and effective backstop", Noyer said, after what he described as an unjustified rise in the extra return investors demanded to lend to Spain over Germany.

"The mechanism is in place, the rules are perfectly clear and the ball is entirely in the governments' courts."

22/09/2014 00:07Sydney, Australia. 22 September,2014
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