BRUSSELS (MNI) – The 17 finance ministers of the Eurozone are
likely to discuss ways to increase the firepower of the currency union’s
rescue fund when they meet in Luxembourg on October 3, EU finance
officials told Market News International.
An idea to allow the E440 billion fund, the European Financial
Stability Facility (EFSF), to leverage its capital through transactions
with the European Central Bank is expected to be discussed along with
other mechanisms that could give the fund more cash, the officials said.
Talks among the finance ministries are still at a very early stage
and the agenda for the October meeting has not yet been finalized, the
officials noted.
Leveraging the EFSF, although controversial with some governments,
could be useful in allaying investors’ fears, which have been driving up
borrowing costs for more and more Eurozone governments.
The idea, which was raised by US Treasury Secretary Timothy
Geithner at a meeting of Eurozone finance ministers in Poland earlier
this month, did not go down well with EU officials at the time.
Under the Term Asset-Backed Securities Loan Facility (Talf) set up
by the US Federal Reserve and the US Treasury in 2008, the New York Fed
was able to accept asset-backed securities as collateral to lend, thanks
to credit protection offered by the Treasury.
Peter Koh, Brussels Correspondent, Market News +32(04)95228374
[TOPICS: M$X$$$,MGX$$$,M$$CR$,MFX$$$,MT$$$$]
