EU to float IMF-style fund

08:37, March 10, 2010      

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The European Commission will float proposals to create a "European IMF" within 24 hours, a body that could rescue debt-hit countries such as Greece, a Brussels official said Monday.
Economic and Monetary Affairs Commissioner Olli Rehn will "inform" the full commission executive today of ongoing "discussions" on the issue, his spokesman said.

Plans to "reinforce economic coordination and country surveillance" across Europe will be centered on the 16 nations that share the euro currency, which has come under pressure as a result of the Greek budget crisis.

The spokesman, Amadeu Altafaj Tardio, said the commission is "ready to propose such a European instrument," and gave a tentative deadline of the end of June for full details on how and by whom it will be funded.

Earlier, Rehn told Monday's Financial Times Deutschland newspaper that the monetary fund "would have the support of eurozone members" and that such financial aid would be linked to "strict conditions."

"Things are happening quickly," the spokesman said, noting a "clear will on the part of actors in the eurozone to draw lessons from what happened (in Greece) and to take advantage of this opportunity."

The prospect of a European rescue fund that could replicate the International Monetary Fund (IMF) appears to be gathering momentum.

Italian President Giorgio Napolitano called for the creation of a European monetary fund to help eurozone nations in trouble during a visit to Brussels last week.

"The European Central Bank (and) the European institutions are aware that there's something missing from our common tool box to tackle unforeseen and serious crises in one of the eurozone nations," he said.

German Finance Minister Wolfgang Schaeuble, in the forefront of the moves to beef up the bloc's economic toolkit, told the weekend Welt am Sonntag newspaper that "for the internal stability of the eurozone, we need an institution that has the experience and power of the IMF."

The IMF gives out emergency loans to countries with troubled finances, but strict conditions are usually attached.

Weighed down by a deficit more than four times the EU's limit, Greece has initiated a raft of austerity measures, sparking protests and strikes that have hit transport and civil utilities.

Source: Global Times
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