Julian Callow, chief European economist at Barclays Capital spoke to CNBC-TV18 about his expectations of market reaction to the euro summit.
He says that investors are likely to remain cautious of the outcome of the Euro Summit and that Germany is likely to have its way with its demands. He says that it is critical that Greece remains in the euro zone for stability in the Union. Below is the edited transcript of the interview. Also watch the accompanying video. Q: What will be the key things that you will be watching out from the Euro summit tonight which can actually be a relief, if at all for the markets, both the credit and the equity markets?
A: What we need to see is clear and unanimous agreement on the part of euro zone countries that they are going to move very quickly to a new fiscal framework which will bind in their fiscal regime to ensure that they run balance budgets overtime and that will be enshrined in national constitutions and that will be supervised by European authorities such as European court of justice and European commission also heavily involved.
If that process looks like it will be credible and that it will be water-tight and it is universally supported by the euro zone countries, then that will be a very positive outcome because that will show that Germany is getting its way in terms of its demands. If Germany is getting its way, then that can help to create conditions at a later stage for the development of euro bund market for the euro zone, which would be very important for helping countries in southern Europe to be able to borrow at significantly lower interest rates. Q: Do you believe that the Euro Summit will be able to deliver and that there will be a bit of a confidence booster for global equity markets or given the news flow that we got today, that
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