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Afex Global EVP of strategic management Guido Schulz weighs in on the Spanish banking crisis and the eurozone.
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Very much well the price is in the Spanish banking system.
May force EU leaders to rewrite the rule book the European Commission saying today that the Euro zone.
Should move to a banking union big steps and consider directly funding struggling banks from its permanent bailout fund.
As it stands that rescue fund can only provide help to governments not banks.
But the suggestion directly addressing market concerns about problems in the Spanish banking sector and the cost to the Spanish government of rescuing its banks doesn't have enough money.
Investors are increasingly worried the public finances in Spain will become unsustainable.
And it is -- to -- out its banks.
It is the first step towards greater fiscal integration and it comes at a time when Spanish borrowing costs are going through the roof hitting six point 67%.
On the ten year bond once it -- of -- it is considered.
Not sustainable all right so the Euro also hitting -- low against the dollar up trading today below 124 briefly for a time.
As for the first time in almost two years look how can.
Businesses and investors protect themselves against currency volatility.
Well for some -- -- joined by veto shelves global head of strategic management that they facts that's a foreign exchange advisor.
-- -- thank you for joining me where it's poking moral more it seems about the Spanish banking system is but the biggest threat right now.
-- definitely that could be considered as the biggest threat since the Greek crisis has somewhat discounted in the market already.
So investor and trading sentiment is going to be depending on what's being -- -- Spain goes.
And if there are any further knock on effect psalms.
-- over to for example Italy -- well.
It is remarkable how much money we've been seeing coming out of the Euro to -- safe havens even you know the the English gilt so the German bund all the US Paula.
I do expect that to continue.
In the near term I would expect that to continue.
Unless we are going to see a define move towards true fiscal consolidation.
In terms of policies and for himself oversight within the eurozone.
I see that as the only.
True move that could alleviate.
Investor concerns that -- -- -- well we have the European Commission.
As we just -- talking about banking union what about Euro bonds I know Germany has been very strong and his resistance -- the -- that time mrs.
Merkel is stopping to -- surrounded a little bit.
She's definitely on the pressures she's holding stats class.
-- Press Secretary today again.
Insisted on on Germany not being ready to joined that concept.
How ever heard the pressure.
From the eurozone could become overwhelming and eventually.
Under certain conditions which have surgery he's going to ask for will agree to the issuing a -- bonds.
Obviously this -- led to a lot of volatility how does the investor play this kind of market.
That is a tough question Ashley -- there's so many different outcomes says so many different perspectives and even different opinions in the market and -- in the short term from an investor's standpoint if one's livelihood does not depends on.
The market movements it's definitely.
And an environment for opportunity because we're going to see some potential knee jerk reactions should Greece.
Exit the European Union.
Should Spain default further.
That's going to probably lead to some pronounced Euro weakness in the short term and -- strength probably.
A flight to safe haven currencies which which is going to -- constitute -- opportunities for investors.
For a clientele such as ours who are mainly involved in in business payments yeah it is that.
That there are difficult then and and dangerous.
Area to -- in the gate because yes.
Any Ono by any of those movements and any of those knee jerk reactions can have -- lead into their profits so.
-- general sentiment there is this better be safe than sorry and have a comprehensive hedging strategy in place although there is.
What got -- we're running out of time I have one question played his graceful out of the eurozone yes sold know.
Moved there is a growing sentiment that that might happen.
That is a loaded question I met I think that the once and -- that.
But I think there is there's probably at this point in time more of a 6040 chance that it will happen -- I don't.
