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Euro fund reportedly to cost Germany up to €25 billion

The Local · 16 Mar 2011, 08:44

Published: 16 Mar 2011 08:44 GMT+01:00

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The newspaper, which based the report on sources within the governing coalition, reported that an initial principal amount of €80 to €100 billion for the fund was likely. The amount was necessary so that the rescue fund would receive a AAA credit rating from the big rating agencies.

A high credit score is necessary so that the fund can borrow on the credit markets at the best-possible rates.

"If that much capital is really needed, then we have to assume that Germany will have to take on from €18 to €25 billion," a source told the news agency DAPD.

The European stability mechanism (ESM) is the permanent institution that will take over crisis management of the eurozone in 2013 from the Commission's temporary European Financial Stability Facility (EFSF), which was created in the wake of the Greek debt crisis. The new fund is considered crucial to ensuring the long-term viability of Europe's single currency.

The ESM will have an overall effective lending capacity of €500 billion.

A final decision on the ESM will be made at a meeting of EU leaders at the end of next week.

Story continues below…

DAPD/The Local/kdj

The Local (news@thelocal.de)

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Your comments about this article

09:32 March 16, 2011 by storymann
That is a good start,but as the weaker members fail,and fewer members are able to contribute to the bail out fund ,how much is enough?
13:57 March 16, 2011 by berfel
I've always marvelled at the wisdom of lending spendthrifts money so that they can obtain a better credit rating.

Sorry ... that should read "lack of wisdom".
20:25 March 16, 2011 by delvek
The worsening burden of the EU countries on Germany will eventually be what causes Germany to withdraw from it. We are not at that stage yet but its inevitable as the world economies continue to adjust to the new reality.
18:54 March 18, 2011 by Bob Hawkins
Keep it quiet,a weak euro with all the weak euro zone countries on board is greatly in Germanys interest,high currency,high unemployment,if you don't export products at a reasonable price,you will export jobs at a far higher cost
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