Brussels, 13/03/2012 (Agence Europe) - Eurozone finance ministers will decide at their meeting in Copenhagen on Friday 30 and Saturday 31 March on the size of the financial backstop, explained Eurogroup chair Jean-Claude Juncker on Monday 12 March, who personally favours an increase in the effective lending capacity to prevent any spread of the sovereign debt crisis. The European Commission has been instructed to set out the options at the Copenhagen meeting, where ministers will also decide how they will each contribute to the European Stability Mechanism (ESM), the permanent bailout fund that comes on stream in July.
One way of increasing the clout of the European backstop would be to combine the €500 billion of the EMS with the €250bn remaining in the European Financial Stability Facility (EFSF), a temporary bailout fund that it providing cash to Ireland, Portugal and Greece. An increase in the European bailout funds' scope is a precondition laid down by several of the EU's G20 partners, including the United States, for any increase in funding for Europe from the IMF.
EFSF Director General Klaus Regling says that it will be regularly borrowing from the markets. Next week, for example, the EFSF will issue short-term bonds (5 years) along with 25-30 year bonds, in order to raise some €5.9bn in March, €3.3bn in April and €5.3bn in May. EFSF aid for Greece will exceed €100bn over three years in the form of cash borrowed from the markets or directly issued bonds. (MB/transl.fl)