BRUSSELS (MNI) – The low borrowing rate for the European Union on a
bond issued earlier this month to pay for the first tranche of aid to
Ireland shows that markets trust the Eurozone, Eurogroup chairman
Jean-Claude Juncker said following the monthly meeting of Eurozone
finance ministers here.

Juncker, also prime minister of EMU member Luxembourg, told a news
conference that the EU issue, for E5 billion at a yield of 2.5%, was “a
very good rate” and it “shows trust in the Eurozone’s solidity and that
there is confidence in the markets.” That issue was sold through the
European Financial Stability Facility, an arm of the European
Commission.

The EFSF is looking to launch its own inaugural bond next week, a
5-year security maturing July 2016. The facility is targeting a volume
of E3.0 billion to E5.0 billion.

European Commissioner for Economic and Monetary Affairs Olli Rehn,
speaking at the same press conference as Juncker, said the scope of the
EFSF should be widened as part of a four-point “comprehensive” programme
to address concerns over sovereign debt.

He said that first of all, governments must move forward on fiscal
consolidation and that secondly, the Eurozone needs to “improve
financial backstops so that market forces cannot have the slightest
doubt about our capacity to act.” To achieve this, “the EFSF must extend
its scope of activities,” he said.

Thirdly, the banking sector should be subject to another round of
stress tests that would be “even more rigorous” than those conducted in
2010. These would “guide” any necessary restructuring, Rehn said.

Fourthly, EU leaders and legislators must agree on proposals,
without watering them down, to bolster economic governance in the EU,
Rehn said.

Juncker said the Eurozone’s “credibility in the markets is no
longer in question.” He said that while markets were still volatile,
measures taken so far “seem to be working.” He noted that in both Greece
and Ireland, adjustment programmes were on course.

According to Rehn, the Eurozone is undergoing a recovery in the
real economy that has taken hold and has become “more self-sustained.”
He said that the recovery has spread from export growth to domestic-led
demand.

The euro itself is not the problem, Juncker said. Rather, the
crisis in the Eurozone is one of member countries.

Juncker said the Eurogroup would “accelerate” its work on a
comprehensive report to be presented to the EU leaders. He told
reporters that the Eurogroup was considering how to make the EFSF’s full
E440 billion available, but refused to be drawn on the details.

He confirmed that Peter Praet, an executive director of the
National Bank of Belgium, was a candidate for the European Central Bank
executive board.

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