A draft statement leaked on Thursday said the bailout fund would be capped at €700bn and fall back to €500bn when current lending programmes expire, but that a further €240bn would be held in reserve to ensure the fund's lending capacity. At issue is whether a bigger euro firewall will deter the bond markets from attacking the eurozone's weak points – Spain and Italy – by pushing the costs of their borrowing to unsustainable levels, or whether it will simply encourage profligacy.The Germans take the latter view. The Americans, the French, the International Monetary Fund and the Organisation for Economic Co-operation and Development argue the bigger the firewall, the greater the deterrent and therefore the less likelihood that the fund will need to be used."The bigger the firewall, the less risk weaker countries will be attacked by the markets," said François Baroin, the French finance minister. He said the fund should extend to €1tn, a figure also used this week by Angel Gurría, head of the OECD, calling on Europe to create "the mother of all firewalls".That demand was dismissed on Thursday by Germany's finance minister, Wolfgang Schäuble, who is tipped to take over the chair of the eurogroup from Jean-Claude Juncker, the prime minister of Luxembourg, although that decision may be postponed on Friday. "You can make a firewall as high as you want and it will be no help," said Schäuble.
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Friday, March 30, 2012
A draft statement leaked on Thursday said the bailout fund would be capped at €700bn and fall back to €500bn when current lending programmes expire, but that a further €240bn would be held in reserve to ensure the fund's lending capacity. At issue is whether a bigger euro firewall will deter the bond markets from attacking the eurozone's weak points – Spain and Italy – by pushing the costs of their borrowing to unsustainable levels, or whether it will simply encourage profligacy.The Germans take the latter view. The Americans, the French, the International Monetary Fund and the Organisation for Economic Co-operation and Development argue the bigger the firewall, the greater the deterrent and therefore the less likelihood that the fund will need to be used."The bigger the firewall, the less risk weaker countries will be attacked by the markets," said François Baroin, the French finance minister. He said the fund should extend to €1tn, a figure also used this week by Angel Gurría, head of the OECD, calling on Europe to create "the mother of all firewalls".That demand was dismissed on Thursday by Germany's finance minister, Wolfgang Schäuble, who is tipped to take over the chair of the eurogroup from Jean-Claude Juncker, the prime minister of Luxembourg, although that decision may be postponed on Friday. "You can make a firewall as high as you want and it will be no help," said Schäuble.
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4 comments:
Here we go again, more crisis meetings over the coming weeks..................! Nothing to be (will be) achieved.
A moth or two or three down the line the point will be reached when a lot more will be agreed which would have done nicely, thank you very much, if agreed now.
And this is what we are paying £50 0dd million a day.
Definitely not value for money, even the devalued currency!
Europhobes are needlessly climbing their wall of fear over the Eurozone again.
Don't worry phobes, trolls and turfers your angst is wildly exaggerated as always.
This is another "crisis" that will turn out to be nothing of the sort.
What €240billion fund ??? currently it has managed to raise €19bill..... and has been down graded too....
Why do these idiots persist in spouting this fantasy rubbish... Does anyone actually believe this stuff ? I guess there must be some in Europe that do...
I don't know her personally, however, I did make a rather bizarre suggestion as to how Ireland could leave the euro last year to which she made a very sarcastic comment, she subsequently apologised for her comments. I was using my real name at the time.
She is I suspect, quite a decent person.
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