The present picture is that the EU banks need to roll over hundreds of billions of Euros’ worth of debt (possibly trillions) at a time when interest rates would be rising as sovereign bonds fell in value.
With this consideration the future prosperity of the E.U. binary option markets look really questionable. Even, some suggest that the whole union is on the verge of a financial collapse.
A huge percentage of European bank debt needs to be rolled over by the end of 2012.
Between now (autumn 2011) and then (end of 2012):
- French banks need to roll over 30% of their TOTAL debt
- Spanish banks and Italian banks need to rollover more than 33% of their TOTAL debt.
- German banks need to roll over nearly 40% of their TOTAL debt.
- Irish banks need to roll over almost HALF (50%) of their TOTAL debt.
If we only closely observe Spain the picture is the following: The country’s banking system is roughly € 3 trillion (i.e. 3 time its GDP). Also, Madrid’s gross borrowing from Brussels is € 316 billion in April.
In other words, Spain banks have to roll over € 600billion in bonds at times when the global markets and the global bond markets in particular are shrunk to a minimum. Also, thanks to € 100 billion bailout which has put Spain’s REAL Debt to GDP at 146%, Spain is now facing both a banking crisis and a sovereign crisis simultaneously.
The information in the above analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.