Eurozone to pour cash into stability fund

European countries may beef up their financial rescue fund beyond the amount agreed in July, the EU finance commissioner Olli Rehn said in comments to be published in a Germany newspaper Monday.

Eurozone to pour cash into stability fund
Photo: DPA

“We are thinking about the possibility of giving the EFSF (European Financial Stability Facility) greater leverage, to give it greater strength,” Rehn told Die Welt.

Expressing concern over the financial strength of eurozone banks, he said: “The current crisis is a serious combination of a crisis in public debt and weaknesses in the financial sector. We cannot solve one without the other.”

“We need to shore up repair work in the financial sector with a recapitalization of the banks,” he said.

The EFSF was established last year to help shore up debt-ridden countries. Its role is shortly to be expanded in line with measures agreed by eurozone leaders in July, but parliaments in the 17-member bloc must approve the measure and their agreement is by no means certain.

The eurozone had previously agreed to increase the EFSF’s lending capacity to 440 billion euros ($591 billion), but Rehn did give any figures on an enlarged stabilization fund.

Despite a massive EU-IMF bail-out, there is growing concern about the possibility that Greece might default on its debt. Since the July meeting, Italy’s financial problems have also increased.

Last Tuesday, Standard & Poor’s ratings agency lowered its credit rating level for Italy, arguing that a weak coalition was trying to govern an economy with poor growth prospects.

Two days later the finance ministry lowered its growth forecast sharply. Eurozone finance ministers are due to meet in Luxembourg on October 3.


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Paris, Berlin agree on future eurozone budget: French ministry source

France and Germany have agreed on the broad outlines of a proposed eurozone budget which they will present to EU finance ministers in Brussels on Monday, a French finance ministry source said.

Paris, Berlin agree on future eurozone budget: French ministry source
French Economy and Finance Minister Bruno Le Maire (R) and German Finance Minister and Vice-Chancellor Olaf Scholz. File photo: AFP

The common single-currency budget was one of French President Emmanuel Macron's key ideas for protecting the euro, but it caused differences between France and Germany, the region's two largest economies.

French Finance Minister Bruno Le Maire and Germany's minister, Olaf Scholz, will “jointly present a proposition on Monday… about the layout for a budget for the eurozone,” the ministry source told AFP.

“It's a major step forward,” the source said. “We will look forward to sharing with other members.”

The source said the amount of the budget has not been established as the proposal was to first set out the “architecture and main principles” of the budget.

According to a copy of the French-German proposal, the budget would be part of the EU budget structure and governed by the 19 euro members.

Macron will travel to Berlin at the weekend to meet with German Chancellor Angela Merkel where the two leaders will bolster their alliance as champions of a united Europe.

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