Eurozone mulling independent rescue fund: report

23rd December 2010, Comments 0 comments

Several European countries, including Germany, are working on a permanent euro rescue mechanism that would include the creation of a new and independent funding institution, a press report said Thursday.

Germany is considering a "European stability, growth and investment fund," according to a government paper seen by the Sueddeutsche Zeitung daily.

The mooted body would exist side-by-side with the European Central Bank, would benefit from the same independence and would be tasked with helping financially distressed eurozone countries in exchange for strict conditions.

Governments which needed to borrow from the fund would have to put up solid collateral such as gold reserves or private bonds, the newspaper said.

The document said such a fund would have an "unlimited capacity for refinancing" and would be proposed to finance ministers in mid-January.

In addition to Germany, Finland, France, Ireland and the Netherlands are working on proposals. German Finance Minister Wolfgang Schaeuble is to discuss the plans with his French counterpart Christine Lagarde on Thursday in Strasbourg, the report said.

The newspaper quoted Lagarde in a separate article as saying: "We will discuss how we can work more closely together."

The EU set up a one-trillion-dollar rescue fund with the help of the International Monetary Fund in the fallout from the Greek debt crisis but it runs for only three years.

At an EU summit earlier this month, EU leaders agreed to replace it with a permanent mechanism from mid-2013 but the precise details remain to be agreed.

Greece had to be bailed out in May via a 110-billion-euro (150-billion-dollar) EU-IMF accord and Ireland followed in late November, this time using funds from the temporary facility.

© 2010 AFP

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