France’s Baroin,Germany’s Schaeuble:EFSF Must Be Enhanced:FT

Author: Market News International | Category: News

FRANKFURT (MNI) – The European Financial Stability Facility and the
European Stability Mechanism “must be enhanced” to eliminate the risks
of contagion within the Eurozone, French Finance Minister Francois
Baroin and German Finance Minister Wolfgang Schaeuble said in the
Financial Times.

In a opinion piece published in Friday’s edition of the business
daily, the two ministers stressed the importance of Greece implementing
its “drastic” and “profound” reform and privatisation programs so that
it may “overcome its debt problems and return to growth.”

“Yet this alone will not dispel the risks of contagion,” the
ministers wrote. “Therefore we need better tools to ensure that
financial market reactions do not endanger countries while they are in
the process of implementing reforms.”

“That is why the EFSF and ESM must be enhanced to allow both funds
to engage in precautionary programmes, to recapitalise financial
institutions and act on secondary markets if necessary to counter
contagion risks in a timely fashion,” they added.

The ministers acknowledged that rebuilding confidence in the
Eurozone will take time and stressed that governments had already begun
looking at how to better coordinate national fiscal policies.

“Only by evolving the European monetary unions institutional
structures in such a way that euro members are obliged to adopt a fiscal
and economic policy that reflects their joint responsibility for the
common currency will we master the challenges that lie ahead,” Baroin
and Schaeuble said.

“Our path is demanding, but the risks associated with conceivable
alternatives were much worse. We will defend the euro,” the ministers
stressed. “We will not jeopardise the economic and political integration
of Europe, which is the basis of our own prosperity.”

In a separate interview with the FT, Baroin said that it was
important to move quickly to implement the Greek bailout agreed to by EU
ministers one week ago “to ensure there is no room for speculators.”

“They have to realise there is no future in that. That is what
France is doing,” he added. Implementing the program quickly “is clearly
an element in the restoration of confidence.”

Baroin also touched on the idea of a European rating agency “to
open up the virtual monopoly” of the three biggest players, Moody’s,
Standard and Poor’s and Fitch.

— Frankfurt bureau: +49 69 720 142; email: —

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