March 1, 2012 / 11:23 PM / 6 years ago

Euro zone likely to decide on firewall at end-March

BRUSSELS (Reuters) - A decision to boost the euro zone’s bailout capacity could be taken by euro zone finance ministers at an informal meeting in Copenhagen on March 30-31, euro zone officials said at a summit on Thursday.

The euro zone is considering combining the remaining 250 billion euros in its temporary EFSF bailout fund and the 500 billion euros in the permanent ESM facility to create a “superfund” that would better insulate Spain, Italy and others.

The world’s biggest economies, including the United States, Canada, Japan and China, are pressing Europe to combine the resources, a move that would open the way for those countries in turn to provide extra funds to the International Monetary Fund.

But Germany and Finland oppose a bigger fund, saying the current size is more than enough, and their opposition precluded any discussion of the issue at the summit on Thursday.

Two euro zone officials involved in discussions on the size of the ESM/EFSF said the issue was now likely to be discussed only at the informal meeting of EU finance ministers and central bankers in Copenhagen at the end of the month.

“There is a feeling now that the meeting of euro zone ministers on March 12 may be too soon for Germany to be able to move -- the issue is likely to be left until the informal Ecofin,” one euro zone official involved in the talks said.

Herman van Rompuy, who chaired the summit, confirmed the decision could be left to finance ministers.

“We will reassess, as we decided in December, the ceiling of the EFSF and the ESM in March, and it can be done by the finance ministers,” Van Rompuy told a news conference after the first day of the two-day summit.

It was not immediately clear if such a decision would then have to be approved by another euro zone summit before the IMF spring meetings on April 20-22 in Washington, where the world’s biggest economies will decide whether to boost IMF resources.

Van Rompuy also said that leaders would discuss on Friday the pace at which capital is paid in to the ESM, which is supposed to get 80 billion euros in five annual installments from the euro zone.

“There could be an acceleration, starting with the payment of two tranches in 2012, but we have to take a definitive decision tomorrow morning,” Van Rompuy said.

The pace at which capital is paid in will determine how quickly the bailout fund will reach its full capacity.

Reporting By John O'Donnell, Luke Baker, David Brunnstrom and Jan Strupczewski

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below