BERLIN, Sept 23 Euro zone states are preparing
to allow the bloc's permanent bailout fund to leverage its
capital in the same way as its predecessor so it can reach a
capacity of more than 2 trillion euros and rescue big countries
if necessary, Der Spiegel said on Sunday.
The weekly news magazine said that the European Stability
Mechanism (ESM) would have two instruments like its predecessor,
the European Financial Stability Facility (EFSF), that would
only allow public money to be used for particularly risky
transactions such as buying Spanish bonds, while private
investors would provide the rest.
It had always been expected that the ESM, which is expected
to come into force on Oct. 8 with a capacity of 500 billion
euros, would have the same leverage ability as the EFSF and euro
zone finance ministers reiterated this at their meeting in
Cyprus earlier this month.
If the ESM gets approval to use the same leverage techniques
as the EFSF, it would have a lending power of around 2 trillion
euros without countries having to contribute any more capital to
But these leverage options have not been approved by all
euro zone member states and Finland is especially reluctant to
agree to them.
German Finance Minister Wolfgang Schaeuble supports the plan
but Finland is preventing the Eurogroup from passing it quickly,
the report said.
A spokeswoman for the German finance ministry confirmed that
following the German Constitutional Court's ruling on the ESM,
the guidelines in Europe were being reworked and that part of
this would be covered by the ESM while the rest would come from
private investors, which would be a kind of leverage.
This part was in the process of being approved in Brussels,
The spokeswoman said that the ESM would have the same tools
as the EFSF.
She also said that German liability remained capped at 190
billion euros and added that when work had been completed at an
EU level, the result would be presented to the German Bundestag
lower house of parliament for approval.
The figure of 2 trillion euros was, however,
incomprehensible, she said.
A spokesman for the European Commission declined to comment.
A separate report in Germany's Focus magazine said that
Schaeuble and German Chancellor Angela Merkel wanted to beef up
the position of the EU Currency Commissioner to give him the
sole power to decide in deficit proceedings against states which
do not stick to their targets.
Merkel and Schaeuble also want the EU Currency Commissioner
to have the power to demand amendments to draft budgets which
include excessive deficits, the magazine said.
A spokesman for the finance ministry declined to comment on
the Focus report and pointed both to ongoing discussions and to
the task of heads of government to think about ways to
strengthen the currency union.