Eurozone area sees little impact from Dubai crisis
BRUSSELS, Belgium — Eurozone governments see few ripples from the Dubai debt crisis hitting economic growth or banks in the 16 nations that use the euro, a senior economy official said Tuesday.
Last week’s announcement from Dubai World, a government investment company with debt worth $60 billion, that it wanted to postpone forthcoming debt payments until May sent shock waves around financial markets.
“The exposure of our banking institutions to Dubai is very limited,” the head of eurozone finance ministers, Jean-Claude Juncker, said after talks with eurozone governments Tuesday. “We think that the negative effect of the fallout in Dubai will be very minor indeed.”
British banking shares have fallen in recent days on worries that borrowers in Dubai may default on loans. Britain is not part of the euro currency zone.
French Finance Minister Christine Lagarde told reporters the crisis was “essentially regional” and did not pose a systemic risk to the global economy.
She said it showed the importance of eliminating the shadows from the global financial system and “shedding light on exposure, on risks.” France is calling for tighter worldwide rules and oversight over financial groups and jurisdictions that dodge rules elsewhere.