France bids to downplay euro rift with Germany

21st October 2011, Comments 0 comments

French Finance Minister Francois Baroin sought Friday to play down a row between Paris and Berlin over how best to use the EU's 440-billion-euro ($610-billion) bailout fund to shore up confidence in the euro.

Speaking to reporters after more than seven hours of talks on the eurozone debt crisis, Baroin said: "We're still going. I think we are going in the right direction, considering the different points of view."

Progress towards a solution on the eurozone debt crisis has been stymied by a spat between France and Germany over how best to maximise the lending capacity of the fund.

France wants the give the fund a banking licence to allow it to borrow from the European Central Bank, a proposal strongly rejected by Berlin.

"We continue to think that this is the best solution," said Baroin, but added that France was not aiming to make its position on the fund "a definitive point of argument."

"What matters is what works," he said.

Germany would prefer using the fund to insure bondholders for losses potentially incurred from their holdings of debt issued by shaky eurozone countries.

By using such financial trickery, the firepower of the fund could be magnified to more than a trillion euros, which EU officials hope will restore confidence to jittery markets.

German Finance Minister Wolfgang Schaeuble reiterated earlier Friday that the EU treaties prevent the ECB financing the debts of member states.

© 2011 AFP

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