Open

Coming up

Don't miss

Replay


LATEST SHOWS

MEDIAWATCH

Ferguson and race relations in the US

Read more

DEBATE

Hollande and Africa: French President Speaks to France 24

Read more

FOCUS

Thiaroye: a dark chapter in France and Senegal's common history

Read more

THE BUSINESS INTERVIEW

The 'Stagnation Trap', with Catherine Mann, Chief Economist at OECD

Read more

ENCORE!

'An American in Paris', a truly transatlantic collaboration

Read more

BUSINESS DAILY

Oil prices 'could fall further' without OPEC output cut

Read more

IN THE PAPERS

How not to argue over Thanksgiving dinner

Read more

IN THE PAPERS

Just how green is François Hollande?

Read more

WEB NEWS

USA: African Americans call for boycott of 'Black Friday'

Read more

Europe

Eurozone unlocks €500 billion war chest

© AFP

Latest update : 2012-10-09

The eurozone unlocked its long-awaited €500 billion European Stability Mechanism on Monday amid fresh concerns over the economies of Greece and Spain. The fund will be operational by the end of the month, fund chairman Jean-Claude Juncker said.

The eurozone unlocked on Monday its 500-billion-euro crisis war chest, the European Stability Mechanism, amid worries over Greece and as Spain agonised over whether to call for a full bailout.

The launch of the 500-billion-euro ($650 billion) ESM -- immediately given an 'AAA' rating by credit giant Fitch -- "marks an historic milestone in shaping the future of monetary union," Luxembourg Prime Minister and fund chairman Jean-Claude Juncker said.

Germany’s Merkel on high-security visit to Greece

German Chancellor Angela Merkel arrives in Greece on Tuesday to support its embattled government amid planned new anti-austerity protests, her first visit here since the economic crisis erupted more than two years ago. Thousands of police will create a safety zone for Merkel's meetings with conservative Prime Minister Antonis Samaras and President Carolos Papoulias, aiming to keep demonstrators at arm's length.

(AFP)
 

Juncker spoke after the inaugural meeting of the ESM's board, made up of the finance ministers from the 17 countries that share the currency. The ministers then went into talks on Greece and Spain.

The permanent rescue fund, which was initially due to enter service on July 1 but was delayed by a challenge at the German Constitutional Court, is not yet operational however.

In a first stage it will contain 200 billion euros ($260 billion) of working monies once the first instalments of government capital are paid in by end month.

Juncker said the currency union, troubled for the last three years by massive sovereign and banking debts, had now "closed the gap in euro area institutions" with another element in "a comprehensive plan to reshape economic governance."

The ESM monies will build on top of resources left in a temporary fund, the European Financial Stability Facility (EFSF), taking combined lending capacity during the latter's wind-down to a total of 700 billion, the ESM said in Luxembourg.

European Commission President Jose Manuel Barroso said this was "comparable only with the IMF," and Fitch said the fund's outlook was "stable."

ESM managing director Klaus Regling said it was his "expectation" that the chest, like the temporary EFSF, would in time leverage up the fund's lending reach using complicated financing techniques.

The EFSF raised about 40 percent of its assets from Asian investors on the back of eurozone government guarantees.

Long anticipated, the ESM makes its formal debut 10 days before the European Union's 27 leaders meet in Brussels for talks expected to focus once again on bailing out Greece and on tensions in Spain.

EU officials last week said Greece was unlikely to get a green light in Luxembourg to resume talks following differences with the European Commission, European Central Bank and International Monetary Fund creditors.

Greek Prime Minister Antonis Samaras said Friday that his country could not take more bitter medicine. If its next aid instalment of 31.5 billion euros ($40.6 billion) did not arrive soon, by November state coffers would be empty, he said.

German Chancellor Angela Merkel is due in Greece on Tuesday, to what could be a hostile reception from many Greeks who see her as responsible for their problems.

Merkel's Finance Minister Wolfgang Schaeuble said in Luxembourg that "Spain does not need a programme," underlining: "That is what the Spanish government has said over and over again."

The issue of funneling new aid to Madrid has become more complex since eurozone hardliners Germany, the Netherlands and Finland questioned commitments made at a June eurozone summit.

Leaders had notably agreed the ESM would be able to recapitalise banks directly once a single banking supervisor was in place, which initially was targeted for the end of the year.

That timetable has now slipped, and the three nations said the ESM should not be used to help banks bailed out before it became operational.

Ireland, like Spain, wants to be able to capitalise banks directly from the ESM.

Irish Finance Minister Michael Noonan said markets had "priced in" decisions taken by leaders at a June 29 eurozone summit.

"I think the markets think we're back to where we were on policy on June 29, and that we'll be able to implement it," he said.

(AFP)

Date created : 2012-10-08

  • EUROZONE

    Eurozone unemployment hits record 18.2 million

    Read more

  • FRANCE

    Thousands march in Paris against 'austerity'

    Read more

  • FRANCE

    French budget sees modest cut in state jobs

    Read more

COMMENT(S)