Nicosia, 17/09/2012 (Agence Europe) - The eurozone's permanent bailout fund, the European Stability Mechanism (ESM), with a lending capacity of €500 billion, will be up and running on Monday 8 October, the same day as a meeting of eurozone finance ministers in Luxembourg, assuming that Germany has introduced the ratification legislation by then. Klaus Regling, director of the temporary European Financial Stability Fund (EFSF), who will also be the director of the ESM, said that the first meeting of the ESM's management committee (comprising eurozone finance ministers) would be on 8 October and the fund should become operational that same day. He was speaking on Friday 14 September after a meeting of Eurogroup and added that he expected the ESM to be as successful as the EFSF, which recently managed to drum up cash on the money markets at negative interest rates.
The head of Eurogroup, Jean-Claude Juncker, pointed out that the seventeen eurozone nations would be paying out a total of €32 billion in contributions to ESM capital, which would give the fund an initial lending capacity of nearly €200 billion.
The eurozone welcomed the recent ruling by the German constitutional court, paving the way for the country to ratify the ESM, the final step before the fund comes onstream (see EUROPE 10687). Juncker said the ministers had discussed the court's two requests about legal interpretation of the ESM and had all agreed that there were no measures in the EU treaty that could be interpreted as an obligation to force an increase in the contributions paid by ESM member states without prior authorisation from representatives of the countries in question. He said the ministers had also agreed that the EU treaty does not forbid detailed information being provided to national parliaments, as laid down in national legislation. In the next few days, Eurogroup will publish an official statement on the matter, in order for Germany to be able to complete the ESM ratification process.
The eurozone's biggest economy, Germany, has promised €190 billion to the ESM. The country's supreme judges at the Karlsruhe court ruled that any increase in Germany's financial contribution to the ESM must be rubber-stamped by German parliamentarians. (MB/transl.fl)