The story has a familiar ring – Europe’s finance ministers hold crucial talks on how best to save Greece and stop the whole euro project going into free fall. This time the bloc’s revamped bailout fund, the so-called European Financial Stability Facility, was the top topic. Belgium’s finance Minister Didier Reynders urged quick implementation.
“I think every day that passes results in us giving negative signals. It also results in us losing a lot of time. I hope that after all the efforts that we’ve made for Greece it will be done quickly, and that in the coming days the decision to give Greece the next tranche of financial aid will be confirmed and that all national parliaments will do what is needed.’‘
Finland’s Finance Minister Jutta Urpilainen
seemed less keen, however, to increase the fund’s firepower.
“No we don’t want to increase the capacity of the EFSF,” she said.
Even if ratified, many doubt whether the fund is big enough to cope, something Germany’s finance minister was keen to dispel.
‘‘As regards the EFSF, as I said in the Bundestag on Thursday, Greece and Portugal only make up about 10 per cent of the fund. That’s why such market speculation right now makes no sense,’‘
Wolfgang Schauble said.
But many experts disagree arguing much more cash is needed for the fund to be able to finance all of the euro zone’s needs.
Pierre Defraigne Madariaga from the College of Europe Foundation said: “We need more leverage, there’s no doubt we need to strengthen the 440 billion. It would also be a serious error to just rely on the ECB to do this job. This also allows politicians to escape what is really a financial responsibility. That is, to transform this monetary union into a budgetary union with the fiscal resources that could completely disarm the lack of trust in the markets.’‘