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Germany sees no reason to raise EU bailout fund guarantees

(Xinhua)

08:38, January 17, 2012

BERLIN, Jan. 16 (Xinhua) -- The German government said Monday that it has no intention to raise guarantees of European Financial Stability Facility (EFSF), despite speculation that the bailout fund itself may be downgraded after nine eurozone nations'ratings were cut last Friday.

"The government has no reason to believe that the volume of EFSF's guarantees has now are not enough to carry out its current obligations," Steffen Seibert, the government spokesman, told reporters in a press conference.

Meanwhile, German Finance Minister Wolfgang Schaeuble also told Deutschlandfunk public radio that the guarantees for the EFSF are "largely enough" for its function in the coming months in his view.

Following S&P's massively cut of ratings of nine eurozone nations last Friday, markets began to fear that the EFSF, which is backed by commitments from eurozone member states, particularly strong economies, is at risk of being downgraded in near future.

However, in response, German Chancellor Angela Merkel said on Saturday that she did not believe "the downgrade in any way has an impact on Germany having to do more than others."

Seibert on Monday added that the EFSF' successor, the European Stability Mechanism (ESM), would be more immune to the views of rating agencies due to its capital structure.

The new mechanism with 500 billion euros (630 billion U.S. dollars) of initial lending volume, is expected to be launched in July 2012, one year earlier than previously planned, as agreed by European leaders in December's summit.

Some German media reported that Berlin is considering paying its contribution of 21 billion euros (26.46 billion dollars) to the ESM at one fling, rather than through five annual payments as initially planned, if other eurozone members would like to do the same.

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