Germany has banned short selling transactions and speculation on bonds

Germany has banned short selling transactions and speculation on government bonds made through CDS. Decision came into force those days and will be valid until March 31, 2011.

Federal Financial Supervisory Authority of Germany announced that the restriction applies to the actions of ten banks and insurance companies. Institution representatives added that the measure was necessary because of "extraordinary volatility" of euro area bonds.

International media reported that the coalition government led by Angela Merkel seeks to impose stricter rules regarding financial markets. Germany wants to extend to the European level a number of measures that are applied successfully in their own country, which impose harsh restrictions on the public money.

Germans fear that without strict control, countries benefiting from the assistance plan of 750 billion will waste money on running costs without cutting their budget deficits.

Some experts say that decisions like banning short selling transactions and speculation on government bonds will not do nothing but aggravate the risks internationally and highlight concerns regarding the euro strength.

[posted by : OFP on May. 20, 2010]


TAGS: germany, investment, short selling, transaction, speculation, bonds

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