EU finance ministers talk over 600-billion-euro rescue mechanism

08:59, May 10, 2010      

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European Union (EU) finance ministers inched towards a deal on an unprecedented rescue mechanism worth 600 billion euros (765 billion U.S. dollars) to prevent spreading of the Greek debt crisis as their talks dragged into early Monday.

Among the 600 billion euros, the largest bulk, or 440 billion euros (560 billion U.S. dollars), would probably come from bilateral loans from the 16 eurozone countries, but final details remained to be seen, sources said.

On top of the eurozone countries' contributions, the International Monetary Fund (IMF) was expected to pour in 100 billion euros (127 billion U.S. dollars).

As the third source for the largest-ever crisis fund, the European Commission, the EU's executive arm, would raise 60 billion euros (76.5 billion U.S. dollars) from the financial markets on behalf of the EU, which means the borrowing would be guaranteed by all 27 EU governments.

The 60 billion euros, used for eurozone countries, would be added to an existing 50-billion-euro (64-billion-dollar) facility for non-eurozone countries faced with difficulties in balance of payments.

Finance ministers from the 27 EU member states were gathering in Brussels for an extraordinary meeting, aiming to hammer out a safety net to contain the spreading of Greek debt crisis and support a declining euro.

The euro fell to 14-month lows last week as financial markets feared that Spain and Portugal might follow Greece into crisis although the eurozone countries activated a 110-billion-euro (140- billion-dollar) bailout package for the debt-laden country.

EU finance ministers were racing with time to find a deal on the rescue mechanism from which other eurozone countries could resort to if they face similar situation as Greece. They hoped the mechanism could be ready before trading resumes on Asian markets on Monday morning so as to assure investors, but with only one hour to go, talks continued.

"We will do whatever is necessary," Spanish Finance Minister Elena Salgado, whose country holds the EU rotating presidency, said. "We cannot afford disappointment with the markets."



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