BERLIN (MNI) – ECB Governing Council member Ewald Nowotny opposes
any attempt to make the European Financial Stability Facility (EFSF)
permanent, he told German weekly Wirtschaftswoche in an interview
published Monday.
The E440 billion EFSF was created earlier this year by EU leaders
to assuage markets at the height of the Eurozone’s sovereign debt
crisis. It would provide emergency loans to EMU states that get into
financial trouble and have no other recourse.
Making the EFSF permanent “would not be a good idea,” Nowotny, who
heads the Austrian National Bank, was quoted as saying.
Still, he said one could discuss a possible prolongation of the
EFSF beyond 2013. “If one sees after a while that the states have
achieved a lot of reforms then some flexibility is conceivable,” he
explained. At the moment, however, he said he does not see any need to
prolong the fund, not even in the case of Greece, he added.
Regarding the reform of the EU Stability and Growth Pact, Nowotny
said he opposed the German proposal for allowing an orderly insolvency
of Eurozone member states.
“In theory that may be an interesting concept,” he remarked.
However, “on the EU level it would not be easy to formalize that and to
fit it into the existing rules.”
Regarding the recent Basel III agreement on new banking capital
regulations, Nowotny warned that national parliaments could still water
down the rules. “We must be careful that [the rules] aren’t weakened
markedly when passed into European and national law,” he said.
–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com
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