Tackling the Debt Crisis: Ministers Agree To 500-Billion-Euro Permanent Rescue Fund
Euro-zone finance ministers have agreed to effectively double the volume of the euro rescue fund from 2013 when it becomes a permanent mechanism. The fund will have an effective lending capacity of 500 billion euros, said Luxembourg Prime Minister Jean-Claude Juncker.
The euro symbol outside the European Central Bank in Frankfurt. Finance ministers have agreed on the size of the future permanent euro rescue fund.
Euro-zone finance ministers meeting in Brussels on Monday agreed that a permanent rescue mechanism to be set up from 2013 would total 500 billion euros ($675 billion) -- significantly higher than the current rescue fund.
Apart from the euro zone, the ESM would also get cash from the International Monetary Fund and, possibly, from voluntary contributions from non-euro zone European Union countries, Juncker said.
The ESM is intended to replace the temporary euro rescue fund, the European Financial Stability Facility (EFSF), which was hurriedly set up in May to avert a collapse of the single currency in the wake of the Greek debt crisis.
No Deal on Expanding Current Rescue Fund
EU officials are worried that the current fund may not be big to cope if Portugal and Spain were to follow Greece and Ireland in needing a bailout. But Monday's meeting yielded no agreement on enlarging the fund's effective lending capacity. Germany is opposing an immediate increase in the EFSF unless other euro zone member states agree to cut public spending and make their economies more competitive.
Germany's " competitiveness pact", supported by France, includes higher retirement ages, a German-style "debt brake" to limit government bond issuance, a common corporate tax base and an end to inflation-linked wages. But other euro-zone countries are resisting the proposal. EU leaders are to meet first on March 11 and then on March 24-25 to reach a deal on the comprehensive package.
cro -- with wire reports
© SPIEGEL ONLINE 2011
All Rights Reserved
Reproduction only allowed with the permission of SPIEGELnet GmbH