Boost rescue fund needed

11:00, December 07, 2010      

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Eurozone finance ministers, meeting Monday, will face pressure to increase the size of a 750 billion euro ($997.4 billion) safety net for crisis-hit members in order to halt contagion in the single currency bloc.

Dominique Strauss-Kahn, the head of the International Monetary Fund (IMF), will call on the ministers to increase the fund and urge the European Central Bank (ECB) to step up its purchases of bonds to stem the crisis, according to an IMF report obtained by Reuters.

The IMF report and the situation in European debt markets will be discussed at length, a eurozone source said Monday at the regular meeting of the entire "Eurogroup."

That will be followed by a meeting today of ministers from the 27-nation European Union, who are expected to formally approve an 85 billion euro ($113.04) aid package for Ireland and discuss the reform of EU budget rules.

Bond-buying by the ECB helped calm markets at the end of last week. It also helped lower the borrowing costs of countries such as Portugal, Spain and Italy, which have come under intense market pressure in recent weeks.

But that may have been only a temporary respite for the 16-nation currency bloc, which some experts believe may not survive in its current form if the debt crisis rages on much longer.

Ewald Nowotny, a member of the ECB governing council, said on Austrian television that the eurozone economy had become so closely intertwined that splitting off peripheral states with debt problems would be counterproductive.

"Europe has already grown together so much that an amputation would have massive disadvantages for both sides," he said.

Luxembourg's prime minister, Jean-Claude Juncker, and Italian Finance Minister Giulio Tremonti called for the issuance of joint European sovereign bonds - or "E-bonds" - to assert the "irreversibility of the euro."

The pair, in a column published in Monday's Financial Times, said the creation of a European Debt Agency, that could issue such bonds, would be possible as early as this month if the body that represents member states endorses it.

Source: Global Times

(Editor:黄蓓蓓)

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