EU leaders to vow July 9 start for ESM permanent bailout fund
BRUSSELS (Reuters) - European Union leaders will declare next week that the euro zone's permanent bailout fund, the European Stability Mechanism (ESM), will become operational on July 9, draft conclusions for the EU summit showed.
Italy's European Minister Enzo Moavero cast doubt this week on whether the 500 billion euro ($635 billion) fund will be operational as planned, because of delays in ratification in euro zone countries.
So far only France, Greece and Slovenia have fully completed the ratification of the ESM treaty, although many other countries are advanced in the process. Germany is to vote on the ratification on June 29.
"The signatories of the ESM Treaty will ensure its entry into force by July 9, 2012," the draft conclusions, obtained by Reuters, showed.
Euro zone governments prefer the ESM to the EFSF, because bailouts handled by the permanent fund will not increase the debt of euro zone countries, unlike with the EFSF, where the guarantees for EFSF borrowing count as government liabilities.
Until mid-2013, both funds will run in parallel, although if there were to be any new bailout for a euro zone country, it would be handled by the ESM, which is one of the euro zone's tools to deal with the sovereign debt crisis.
The draft conclusions also showed that leaders will ask EU finance ministers to quickly examine proposals from the executive European Commission for EU-wide rules on bank resolution and recovery, so they could be adopted by the end of the year.
The leaders will also say that they quickly want to see proposals on a European deposit guarantee scheme and bank capital requirements. ($1 = 0.7873 euros)
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