S&P Downgrades EU Credit Rating
The euro traded steadily on Monday after losing some ground to the dollar last week after the US Federal Reserve decided to decrease its monthly asset purchases to $75 billion each month. The common currency traded at $1.368 on Monday morning at 5:49 GMT
The Wall Street Journal reported that S&P cited a deteriorating financial profile and a lack of cohesion between member states as the reason for the downgrade. The decision came shortly following the firm's downgrade of the Netherlands' triple- A credit rating.
S&P reduced the eurozone's triple-A rating to double-A-plus.
The bloc's recent budget negotiations played on Standard & Poor's evaluation as the firm said the disagreements between member states have created some risks to the EU's support. However, EU economics chief Olli Rehn fired back, saying the worries were unfounded.
Rehn said he thinks the bloc's creditworthiness shouldn't be judged based on the member states' ratings. He underscored that eurozone members have always contributed to the EU's budget, even through the worst of the region's economic crisis.
The common currency found some support after eurozone finance ministers met their goal to agree on a method to wind down failing banks before the start of 2014. The agreement, announced on Thursday, has received some criticism from analysts who believe the process is too complicated and leaves the new banking union vulnerable to the interests of national governments.
The deal will still need to be ratified by the bloc's policy makers in 2014 before it is enacted.
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