May 16, 2018 / 8:07 AM / in a year

Merkel: ESM could become common backstop for banks

FILE PHOTO: German Chancellor Angela Merkel speaks during the 2018 budget debate at the lower house of parliament Bundestag in Berlin, Germany, May 16, 2018. REUTERS/Hannibal Hanschke

BERLIN (Reuters) - German Chancellor Angela Merkel said she supported a proposal by Finance Minister Olaf Scholz for the euro zone’s bailout fund to become a common backstop so long as risks in national banks’ balance sheets were reduced first.

“The global view on single currency unions is that countries must in the end be responsible (for their actions),” Merkel told lawmakers on Wednesday in response to Scholz’s proposal for a reform of the European Stability Mechanism (ESM).

“And that’s why it’s right and good to further develop the ESM, to give it tasks that come close to those of a international monetary fund. We can do this on our own,” she added.

Reporting by Michael Nienaber, editing by Thomas Escritt

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