Brussels, 24/09/2012 (Agence Europe) - Eurozone countries are discussing how to transfer to the new eurozone bailout fund, the European Stability Mechanism (ESM), the two instruments used to give the existing bailout fund, the European Financial Stability Fund (EFSF), leverage so it can raise cash to lend to countries as required. On Monday 24 September, a European Commission spokesman said that in this transition period, technical talks were taking place about how to transfer the instruments to the ESM.
In January 2012, the eurozone set up two financial instruments, which have not yet been used, to triple the EFSF's lending capacity. One is called SPIV and provides insurance against the sovereign bonds of struggling countries (an idea piloted by former Luxembourg prime minister and former president of the European Commission Jacques Santer) and the other is a co-investment fund, CIV, under the aegis of the International Monetary Fund (see EUROPE 10538). If both instruments are transferred in their current form to the ESM, the latter would have potential lending capacity of €1.5 trillion. Only Finland has reservations about such a transfer because it fears that the EFSF and ESM would lose their senior lender status (which doesn't apply to the loans to Spanish banks). It is not yet clear whether new guidelines will be complete in time for the first ESM management board meeting on the fringes of the Eurogroup meeting on 8 October 2012. (MB/transl.fl)