The Refugee Crisis And The ECB
ACFX | Nov 27, 2015 05:19AM ET
As we head into next week and the start of the last month of 2015, one would have expected that the markets would be in a holiday mode as trading volumes decline during the beginning of the festive season.
In reality, the opposite is very much the case. On Thursday of next week, Mr. Mario Draghi, who is the president of the European Central Bank will give his final and probably most important press conference of the year.
The markets are expecting President Draghi to announce new measures that will help to kick start the Euro-Zones patchy economic recovery.
There have been complications since the last ECB meeting with a refugee crisis vividly shown on European television channels causing real friction between the leadership of political parties and the rank and file members as well as between European Union member Governments.
This refugee crisis has been followed by the tragic events that have unfolded in Paris and the need to shut down productive economic activity in much of Belgium due to fears of further terrorist action.
With the Schengen treaty that allowed for the free movement of persons within the European Union Member borders now under real threat the fear is that the Geopolitical instability that has its roots in the Middle East could eventually restrict the flow of commerce within Schengen member states. The knock on effect would be to further depress the economic outlook for the Euro-Area.
The European nations have a duty of care to look after and provide shelter to refugees who are fleeing conflict. We simply could not allow those fleeing terror to remain on the beaches of Greece and Malta during the cold winter season.
However, accepting so many new arrivals is going to add an extra burden on the resources of the European countries who have offered a safe haven. This comes at a time when these resources are limited.
Furthermore, these refugees will in the medium term want to be fully integrated into society. This will include the new citizens wish to be economically active. The very idea of some estimated one million new arrivals being accepted into the euro-area will have the analysts at the ECB trying to ascertain very quickly what the likely impact will be on inflation and the job market.
This brings us back to the events of next week. The ECB is already under pressure to act on the economy and it is very likely that it will announce an expansion of the current quantitative easing programme.
Get The News You Want
Will the refugee crisis have an impact on ECB policy? Probably not at this stage. However if the crisis in Syria and Iraq is not resolved soon and if the world's powers do not settle their differences and move ahead to alleviate the plight of these countries populations, then the potential for serious impact on the euro-area economy should not be ruled out.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.