BRUSSELS (MNI) – The European Central Bank Thursday stated clearly
its opposition to any role for the institution in leveraging the
Eurozone bailout fund, the European Financial Stability Facility,
instead urging governments to boost the fund’s firepower themselves.
“It is not appropriate for central banks to leverage the EFSF,”
said ECB President Jean-Claude Trichet at the last monetary-policy press
conference of his eight-year term.
“Governments have their own capacity to leverage the EFSF
themselves,” he said.
“We indeed are calling on governments, when they have decided the
EFSF, to leverage [it] themselves with the maximum amount of power,
their own funds, to ensure financial stability,” said Trichet.
EU officials are examining ways to boost the power of their E440
billion bailout fund to act as an effective firewall against the spread
of the Eurozone’s sovereign debt crisis.
Eurozone finance ministers after their meeting in Luxembourg on
Monday already suggested that options to leverage the fund involving the
ECB were unlikely to be a “main avenue of consideration.”
The European Central Bank President urged the 17 governments that
share the euro to implement as soon as possible all aspects of the
crisis response they agreed on 21 July, including powers for the EFSF to
intervene in secondary bond markets and directly support banks in need
of capital and governments in need of cash.
Banks should not hesitate to take advantage of the EFSF if they
need it to boost their capital, said Trichet.
The International Monetary Fund on Wednesday said that it was
prepared to invest alongside the EFSF, probably through a special
purpose vehicle, as a way of leveraging the fund’s resources, should EU
officials request it.
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–Brussels bureau, +324-952-28374; pkoh@marketnews.com
