The G20 Summit has traditionally been known for its successful coordination of economic policy, no exception of the current summit in Mexico city. Non-eurozone countries refuse to fill more money to the International Monetary Fund until the eurozone countries did more. This draft, proposed last Saturday night where the G20 just started, was moving unexceptionally smooth in deciding other countries, such as the US, the UK and the Japan will not pour money into IMF if the eurozone itself does not do more, though shortly after the draft, many countries fled away quickly to avoid media press. The G20 is expecting the current size of eurozone’s 500bn to increase to EUR 750bn.
The stability fund, or the European Stability Mechanism, is nicknamed “firewall” to eurozone. The summit does however agree to make bilateral loans to the eurozone if it can give more money and strength into the crisis itself. Inevitably this is nothing but more Pressure to Germany. Berlin is being put to an awkward position. German minister issued statement again that his government believes that the extra increase in the Monetary Stability Fund is unnecessary since it would create disincentives for deeply troubled countries such as Italy and Spain. ntives" for countries like Italy and Spain to continue reforms. "Let me be clear. It does not make any economic sense [to take such measures],” he said, dismissing the idea of “endlessly pumping money into stability funds [or] starting up the ECB printing press". The pressure put on German is huge.
As a member of the European union, Germany’s economy benefited at the good time and it’s her responsibility to stand out at the rough time now. However, if the current austerity carried out Greece or Italy cannot convince the rest of the investors around the world, it’s not very fair to count on German’s financial bucket for more support. For Forex traders, the current economic outlook is still unsure, despite the boosting economic indicator released recently such the PI in Germany. A continuous close look needs to paid to the European fundamental economic status.
The G20 summit's pressure to the eurozone coutries, mainly Germany to stomp more money into the euro zone firewall, Eurupean Stablity Fund, may cause the market to be bullish on the euro dominiated currency pairs, EURJPY, and EURUSD.
However, the euro zone crisis may still pose a big threat to investors. Despite euro zone leaders have made some progress at attempting to overcome the crisis by agreeing a second bailout, worth 130bn euros, for Greece, the outlook of euro is not cleared.