Eurozone mulling independent rescue fund: report

By Agence France-Presse
Thursday, December 23, 2010 8:28 EDT
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FRANKFURT – Several European countries, including Germany, are working on a permanent euro rescue mechanism that would include the creation of a new and independent funding institution, a press report said Thursday.

Germany is considering a “European stability, growth and investment fund,” according to a government paper seen by the Sueddeutsche Zeitung daily.

The mooted body would exist side-by-side with the European Central Bank, would benefit from the same independence and would be tasked with helping financially distressed eurozone countries under strict conditions.

The German finance ministry acknowledged that a plan had been worked on by its staff but said it was not policy.

“The idea expressed in the article is in no way the official position of the finance ministry or federal government,” it said in a statement.

At the last European Council summit in Brussels this month, governments agreed to establish the framework for a future permanent eurozone rescue fund by March, to ensure the euro’s long-term stability, the statement noted.

Sueddeutsche Zeitung said governments which needed to borrow from the mooted fund would have to put up solid collateral such as gold reserves or private bonds.

The document said such a fund would have an “unlimited capacity for refinancing” and would be proposed to finance ministers in mid-January.

In addition to Germany, Finland, France, Ireland and the Netherlands are working on proposals. German Finance Minister Wolfgang Schaeuble is to discuss the plans with his French counterpart Christine Lagarde on Thursday in Strasbourg, the report said.

The newspaper quoted Lagarde in a separate article as saying: “We will discuss how we can work more closely together.”

The EU set up a one-trillion-dollar rescue fund earlier this year with the help of the International Monetary Fund in the fallout from the Greek debt crisis but it runs for only three years.

EU leaders want to replace it with a permanent mechanism from mid-2013 but the precise details remain to be agreed.

Greece was bailed out in May via a 110-billion-euro (150-billion-dollar) EU-IMF accord and Ireland followed in late November, this time using funds from the temporary facility.

Agence France-Presse
Agence France-Presse
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