BERLIN (MNI) – The German government on Wednesday reaffirmed its
opposition to allowing European Stability Mechanism, Europe’s permanent
bailout fund, to directly lend to troubled banks in the Eurozone.
Government spokesman Steffen Seibert said at a regular press
conference here that the German rejection of the idea of any direct
recapitalisation of banks by the ESM “is well known.”
The treaty creating the ESM explicitly states that the fund can
only lend to governments in return for promises of reforms. The German
government has stressed on numerous occasions that it insists that this
passage of the treaty is respected. The treaty has yet to be ratified by
most governments including Germany.
The European Commission, however, argued in a report released
earlier today that having the ESM bailing out troubled banks could help
break the unhealthy mutual dependency of the currency bloc’s banks and
governments.
“To sever the link between banks and the sovereigns, direct
recapitalisation by the ESM might be envisaged,” the Commission said in
its analysis.
The highly indebted Spanish government currently faces problems in
rescuing its troubled banking sector.
German finance minister Wolfgang Schaeuble will meet his Spanish
colleague Luis de Guindos in Berlin today, German ministry spokesman
Martin Kotthaus said. There will be no press statement after the meeting
because the talks will be “informal,” he explained.
Seibert said the German government still had confidence in the
Spanish government’s reform course.
–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com
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