Germany may be prepared to marry a temporary bailout fund with a permanent one and create a pool of 750 billion euro to rescue the region’s weakest nations.
The FT reports that
According to German and eurozone officials, Angela Merkel is prepared to let the existing European Financial Stability Facility, which has about €250bn in unused funds, run in parallel with its successor, the €500bn European Stability Mechanism, the launch of which has been brought forward to July.
Many worry that the action may give Germany de facto control over the finances of weak nations, but that is a price the eurozone may be willing to pay for stability on contrast to the panic among global capital markets investors over sovereign paper and the future of the region’s banks.
The paper adds
“We think we can get the ESM approved if we link it to solid new budget rules,” a German official said. One European official in turn said Germany was “framing the debate” about budget rules with a possible trade-off on the size of the bailout fund.
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