ECB Is More Leveraged Than The Average Hedge Fund

Peter Jungen, who is the President of SME Union Union, the pro business wing of the European People’s Party (EPP), highlighted at an EPP debate that the ECB is more leveraged than the average hedge fund. He said the ECB is leveraged 21 times, and the Eurosystem 24 times, while the average hedge fund is only leveraged three to four times. He added, “A fall in assets of 4.2% would wipe out the reserves of the ECB balance sheet, which begs the question: who will then bail out the ECB?” He further said that if the ECB applied mark-to-market accounting, it would already be insolvent. (HatTip fot OpenEurope Briefing of November 19, 2010.)  

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