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Berlin pours cold water on new euro fund

Berlin pours cold water on new euro fund
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Germany has disowned a proposal for a new euro-zone stability fund reported in the newspaper Sueddeutsche Zeitung. Berlin attributed it to lower officials in its finance ministry and said they did not speak for the federal government. This revolved around a supposed future “European Stability and Growth Investment Fund”.

A trader at a big Frankfurt-based bank, Oliver Roth, said it might not be a bad thing: “I personally welcome the idea of a growth and stability fund, simply because it shows that the European politicians are aware of the situation of the euro, that we still have structural problems and we have to solve these problems as soon as possible.”

But the ruling coalition condemned any such plans. Members said measures politically incapable of getting majority support will not stabilise heavily indebted members of the euro zone.

Financial services supervision already has in place a European Banking Authority, one for securities and markets and an oversight organ for insurance and occupational pensions. The independent fund would theoretically lighten the European Central Bank’s sovereign debt burden, but a permanent “European Stability Mechanism” has already been approved for crisis management.