LUXEMBOURG: The eurozone unlocked on Monday its 500-billion-euro crisis war chest, the European Stability Mechanism, amid worries over Greece and as Spain agonised over whether to call for a full bailout.
The launch of the 500-billion-euro ($650 billion) ESM -- immediately given an 'AAA' rating by credit giant Fitch -- "marks an historic milestone in shaping the future of monetary union," Luxembourg Prime Minister and fund chairman Jean-Claude Juncker said.
Juncker spoke after the inaugural meeting of the ESM's board, made up of the finance ministers from the 17 countries that share the currency.
The ministers then went into talks on Greece and Spain. The permanent rescue fund, which was initially due to enter service on July 1 but was delayed by a challenge at the German Constitutional Court, is not yet operational however.
In a first stage it will contain 200 billion euros ($260 billion) of working monies once the first instalments of government capital are paid in by end month.
Juncker said the currency union, troubled for the last three years by massive sovereign and banking debts, had now "closed the gap in euro area institutions" with another element in "a comprehensive plan to reshape economic governance."
The ESM monies will build on top of resources left in a temporary fund, the European Financial Stability Facility (EFSF), taking combined lending capacity during the latter's wind-down to a total of 700 billion, the ESM said in Luxembourg.
European Commission President Jose Manuel Barroso said this was "comparable only with the IMF," and Fitch said the fund's outlook was "stable."
ESM managing director Klaus Regling said it was his "expectation" that the chest, like the temporary EFSF, would in time leverage up the fund's lending reach using complicated financing techniques.
The EFSF raised about 40 percent of its assets from Asian investors on the back of eurozone government guarantees.
Long anticipated, the ESM makes its formal debut 10 days before the European Union's 27 leaders meet in Brussels for talks expected to focus once again on bailing out Greece and on tensions in Spain.
EU officials last week said Greece was unlikely to get a green light in Luxembourg to resume talks following differences with the European Commission, European Central Bank and International Monetary Fund creditors.
indiatimes.com
The launch of the 500-billion-euro ($650 billion) ESM -- immediately given an 'AAA' rating by credit giant Fitch -- "marks an historic milestone in shaping the future of monetary union," Luxembourg Prime Minister and fund chairman Jean-Claude Juncker said.
Juncker spoke after the inaugural meeting of the ESM's board, made up of the finance ministers from the 17 countries that share the currency.
The ministers then went into talks on Greece and Spain. The permanent rescue fund, which was initially due to enter service on July 1 but was delayed by a challenge at the German Constitutional Court, is not yet operational however.
In a first stage it will contain 200 billion euros ($260 billion) of working monies once the first instalments of government capital are paid in by end month.
Juncker said the currency union, troubled for the last three years by massive sovereign and banking debts, had now "closed the gap in euro area institutions" with another element in "a comprehensive plan to reshape economic governance."
The ESM monies will build on top of resources left in a temporary fund, the European Financial Stability Facility (EFSF), taking combined lending capacity during the latter's wind-down to a total of 700 billion, the ESM said in Luxembourg.
European Commission President Jose Manuel Barroso said this was "comparable only with the IMF," and Fitch said the fund's outlook was "stable."
ESM managing director Klaus Regling said it was his "expectation" that the chest, like the temporary EFSF, would in time leverage up the fund's lending reach using complicated financing techniques.
The EFSF raised about 40 percent of its assets from Asian investors on the back of eurozone government guarantees.
Long anticipated, the ESM makes its formal debut 10 days before the European Union's 27 leaders meet in Brussels for talks expected to focus once again on bailing out Greece and on tensions in Spain.
EU officials last week said Greece was unlikely to get a green light in Luxembourg to resume talks following differences with the European Commission, European Central Bank and International Monetary Fund creditors.
indiatimes.com
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