The lending capacity of the euro zone's bailout funds could be
increased by EUR100 billion ($127 billion) a German newspaper reports
Monday.
Germany's Die Welt says that under proposals being discussed in
European Union capitals and institutions, Spain's EUR100 billion bank
bailout will be paid out of the temporary bailout fund, the European
Financial Stability Facility, thus leaving the permanent rescue fund,
the European Stability Mechanism, which comes into force July 1,
untouched. The paper cites "EU diplomats from various countries."
It was originally planned that all EFSF aid also be deducted from the
ESM's lending volume, according to the paper. In March EU Finance
Ministers agreed that the EUR200 billion in planned EFSF lending to
Greece, Ireland and Portugal wouldn't be deducted from the ESM's
volume, but rather added to it, thus boosting the two funds' capacity
to EUR700 billion.
Now the idea in Brussels is to take the EUR100 billion for Spain's
troubled banking sector from the EFSF and not pass it on to the ESM,
thus boosting Europe's total rescue capacity to EUR800 billion.
Germany, however, rejects this idea, according to the paper. The
ministry told the paper that the current agreement envisages agreed
programs for Greece, Ireland and Portugal being passed on to the ESM
and that the money for Spain being deducted from the ESM. This would,
thus, limit remaining bailout firepower to EUR400 billion.
Write to Todd Buell at: todd.buell@dowjones.com
(END) Dow Jones Newswires
June 18, 2012 03:14 ET (07:14 GMT)
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