German government okays Europe's latest rescue fund

31st August 2011, Comments 0 comments

Angela Merkel's German cabinet Wednesday approved changes to the latest European rescue fund which now goes to parliament to ratify the deal, officials said.

Extending the European Financial Stability Facility's (EFSF) mandate was agreed in July by European leaders to help alleviate the eurozone debt crisis.

The EFSF, which was set up last year, is to be allowed to buy sovereign debt in public markets and loan money to eurozone governments and commercial banks under certain conditions.

They also agreed to nearly double its effective lending capacity to 440 billion euros ($635 billion), which in Germany's case will mean increasing its guarantees from 123 billion euros to 211.

The Bundestag, the lower house of parliament is to start debating the bill shortly with a final vote expected by September 29.

The Bundesrat, the upper house, is expected to vote on the deal on September 29 or 30.

The reforms must be ratified by lawmakers across the 17-nation eurozone, which has raised concern that it could be a lengthy process.

© 2011 AFP

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