BERLIN (MNI) – The European Commission believes that an increase of
tensions in sovereign debt markets is “unavoidable” in the first months
of 2011, German weekly Der Spiegel reported over the weekend, citing a
strategy paper from EU Monetary Affairs Commissioner Olli Rehn.
In order to get the debt crisis under control, Rehn’s experts have
drawn up a plan that includes making all of the E440 billion in the
European Financial Stability Facility (EFSF) actually available for
borrowing, the magazine wrote.
Currently, only about half that amount can actually be loaned,
because the facility is required to maintain a large reserve in order to
keep its AAA rating.
The Rehn plan would also allow the EFSF to buy bonds of distressed
Eurozone countries in order to relieve the European Central Bank, which
currently performs that duty, Der Spiegel reported.
According to the magazine, the plan also includes sovereign debt
buybacks and lower interest rates on rescue loans handed out by the
EFSF. The EFSF should also be allowed to make its loans available to
struggling banks, according to the plan.
German Finance Minister Wolfgang Schaeuble said Thursday that “one
of the questions we’re discussing at the moment” is how to make the E440
billion in the EFSF fully available if needed. This might mean that “one
needs to step up guarantees…but that is not an enlargement of the
EFSF,” he stressed.
German finance ministry spokesman Martin Kreienbaum said on Friday
that, “one will have to see which screws one has to turn to achieve a
higher share [of the existing funds] actually being available to be
handed out in loans.”
–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com
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