Monday

19th Nov 2018

Eurozone to launch new rescue fund

  • The ESM will move into this building early next year (Photo: Valentina Pop)

Eurozone finance ministers meeting in Luxembourg on Monday (8 October) will hold the inaugural session of the permanent bailout fund, the European Stability Mechanism (ESM), which is to have a firepower of €500bn by next year as countries gradually pay into it..

The fund should have already been operational on 1 July, but constitutional challenges in Germany delayed the launch by three months.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

For now, its headquarters remain within the European Financial Stability Facility (EFSF), a temporary fund set up in 2010 and located in an office building in Luxembourg. Both will move to a bigger nearby location early next year.

Klaus Regling, a German finance official who also worked in the EU commission and is currently in charge of the EFSF, will head up the fund.

But all decisions will be taken by the board of governors, consisting of finance ministers from the 17 eurozone countries. The voting system reflects the share of paid-in capital to the fund, meaning that Germany can veto decisions.

Spain meanwhile is still "considering" formally asking for financial assistance in a bid to lower its borrowing costs. This would take the form of bond-buying by both the ESM and the European Central Bank.

The ESM can buy the bonds of a country only if the country signs up to deadlines for reforms. The ECB, unlike the ESM, can buy unlimited amounts of Spanish bonds, but has also warned that if the country does not stick to the promised reforms, it will halt the purchases.

Ministers are also likely to look at the issue of the ESM being used to directly fund ailing banks in the eurozone. A deal in June said that once a eurozone-only banking supervisor is in place, banks can tap the ESM directly. The move is again aimed at lifting the debt and deficit burden off Spain, whose banks are in need of €60bn.

But Germany, the Netherlands and Finland last week said in a joint letter that no 'legacy assets' should be put on the ESM books, meaning that the €60bn would stay on the Spanish government's books.

Talks will also continue on the banking union and the relation of non-eurozone banks to the new supervisory authority within the euro-area.

Sighs of relief as German court approves bailout fund

Markets and EU politicians breathed sighs of relief as Germany's top court rejected challenges brought against the eurozone's upcoming bailout fund. Any increase in Berlin's contribution will need parliamentary approval, however.

Exclusive

EU commission redacted too much in 'WiFi4EU' papers

Secretariat-general of the European Commission decides that information redacted by directorate-general Communications Networks, Content and Technology should have been made public.

News in Brief

  1. Germany and France agree eurozone budget framework
  2. Austrian foreign minister: EU's Israel policy 'too strict'
  3. Soros and Kurz discuss Central European University move
  4. EU set to tighten rules on foreign strategic investment
  5. Macron repeats call for unified Europe in Bundestag speech
  6. US warns EU banks and firms against trading with Iran
  7. Merkel urged Romania not to move embassy to Jerusalem
  8. Protesters call for Czech leader to step down

Opinion

Dodgy regime lobbying is below the EU's radar

In Brussels, PR professionals and lobbying consultants are working for some of the world's most autocratic regimes. And we have no way of knowing for sure who they are, how much they are paid, or what they are up to.

Stakeholders' Highlights

  1. NORDIC COUNCIL OF MINISTERSTheresa May: “We will not be turning our backs on the Nordic region”
  2. International Partnership for Human RightsOpen letter to Emmanuel Macron ahead of Uzbek president's visit
  3. International Partnership for Human RightsRaising key human rights concerns during visit of Turkmenistan's foreign minister
  4. NORDIC COUNCIL OF MINISTERSState of the Nordic Region presented in Brussels
  5. NORDIC COUNCIL OF MINISTERSThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  6. NORDIC COUNCIL OF MINISTERSThe Nordic gender effect goes international
  7. NORDIC COUNCIL OF MINISTERSPaula Lehtomaki from Finland elected as the Council's first female Secretary General
  8. NORDIC COUNCIL OF MINISTERSNordic design sets the stage at COP24, running a competition for sustainable chairs.
  9. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  10. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  11. International Partnership for Human RightsCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  12. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs

Latest News

  1. Panic is not answer to EU's security challenges
  2. Dutch flesh out proposal for EU human rights sanctions
  3. EU cheerleaders go to Russia-occupied Ukraine
  4. EU must recognise new force for Balkans destabilisation
  5. Brexit dominates EU affairs This WEEK
  6. How the EU commission got tunnel vision on self-driving cars
  7. No-confidence calls against May put Brexit deal in doubt
  8. Key points of the Brexit deal (if it ever comes into effect)

Join EUobserver

Support quality EU news

Join us