European finance ministers have raised their guarantees for the current rescue fund to allow it to lend out a total of euro440 billion ($626 billion), up from about euro250 billion currently.
The European Financial Stability Facility needs to guarantee more than its lending capacity to get a good credit rating and make the bonds it issues attractive to investors.
The ministers hope that the move, which was decided in principle in March, will make the 17-nation eurozone more resilient to the fallout of the exacerbating crisis in Greece and help ringfence other struggling economies.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
LUXEMBOURG (AP) -- European finance ministers have made an important change to their future rescue fund, which they hope will help already bailed out countries regain access to debt markets.
Jean-Claude Juncker, who chairs the meetings of eurozone finance ministers, said Monday the European Stability Mechanism, which will come into force in mid-2013, will not have preferred creditor status when it helps countries that have already been bailed out.
Having preferred status means the fund would be repaid before any private creditors. That had been harshly criticized by many economists, who said it would deter banks and other investment funds from lending any money to already struggling countries.
Source: www.businessweek.com
The European Financial Stability Facility needs to guarantee more than its lending capacity to get a good credit rating and make the bonds it issues attractive to investors.
The ministers hope that the move, which was decided in principle in March, will make the 17-nation eurozone more resilient to the fallout of the exacerbating crisis in Greece and help ringfence other struggling economies.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
LUXEMBOURG (AP) -- European finance ministers have made an important change to their future rescue fund, which they hope will help already bailed out countries regain access to debt markets.
Jean-Claude Juncker, who chairs the meetings of eurozone finance ministers, said Monday the European Stability Mechanism, which will come into force in mid-2013, will not have preferred creditor status when it helps countries that have already been bailed out.
Having preferred status means the fund would be repaid before any private creditors. That had been harshly criticized by many economists, who said it would deter banks and other investment funds from lending any money to already struggling countries.
Source: www.businessweek.com
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