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Europe

Finland votes to expand eurozone bailout fund

Text by News Wires

Latest update : 2011-09-28

The Finnish Parliament approved Tuesday the expansion of Europe's temporary rescue fund and increased its own contribution to €14 billion. The changes will allow cash-strapped eurozone states to receive aid even before they are in crisis.

AFP – The Finnish Parliament on Tuesday approved expanding the eurozone’s bailout fund’s powers and increasing Finland’s share to €14 billion ($19 billion).

Lawmakers voted 103-66 in favor of the government motion with 31 absent or abstaining. The approval had been expected as the six-party government has a majority in the 200-member Parliament with 126 seats.
 
Finland is part of the 17-nation eurozone and its approval is required on bailouts and other help for cash-strapped eurozone members. Under the new law, the bailout fund will be able to buy government bonds and lend money to a country before it is in a full-blown crisis.
 
The measures were agreed at a July 21 summit of eurozone leaders but do not take effect until ratified by national parliaments.
 
Finland had earlier agreed to a €7.9 billion share of the €440 billion fund.
 
The limited size of the eurozone fund has unsettled markets since much of the money is already committed to the Greek, Irish and Portuguese bailouts. European officials have said they are not willing to enlarge it although there has been talk of increasing its firepower through use of financial leveraging.
 
Europe’s debt crisis worsened sharply in early August, and the European Central Bank had to intervene with the drastic step of buying government bonds. That forced down the interest costs faced by Italy and Spain and kept them from being cut off from borrowing at affordable interest rates.

 

Date created : 2011-09-28

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