— Italy Calls For Doubling Fund to E1 Billion
FRANKFURT (MNI) – European Central Bank President Mario Draghi,
hoping for a compromise between a recalcitrant Germany and other
Eurozone countries that would like to see more funding for Europe’s
bailout fund, has proposed using unspent cash from the temporary bailout
fund, the EFSF, to boost the permanent fund, the ESM, to E750 billion,
German magazine Spiegel reported without specifying its sources.
The magazine also reported that Italy’s Prime Minister Mario Monti
wants the Eurozone to double the size of the ESM to E1 trillion from the
current E500 billion, in order to help restore trust in the Eurozone and
bring down borrowing cost for troubled countries.
According to the report, Monti has informed the German government
of his demand. Berlin thus far has steadfastly refused to consider
additional funding for the bailout fund.
Monti’s proposal would not come as a surprise after the Italian
premier said in a recent interview that he would try to show Berlin it
is in “its own enlightened self-interest” to use its strong fiscal
standing to help lower the borrowing costs for Italy and other highly
indebted nations.
Nor is Draghi’s position a surprise. The ECB chief has said
previously that “anything the governments are able to do to increase
that firepower [of the bailout fund] is to be welcomed by the ECB.”
The ESM is scheduled to replace the EFSF in July 2012. It is
expected that at the time, around E250 billion of the temporary fund’s
resources will not have been used.
–Frankfurt newsroom +49 69 72 01 42; e-mail: jtreeck@marketnews.com
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