BERLIN (MNI) – It is increasingly becoming likely that the European
Financial Stability Facility (EFSF) will be made more effective through
insuring a fraction of new sovereign bond issuances of Eurozone member
states, a key lawmaker from Chancellor Angela Merkel’s CDU/CSU-FDP
coalition said Wednesday.
Under this solution, the EFSF would insure a certain percentage of
a bond in order to minimize the risk for private investors. “Things
point in the direction of a first loss solution,” Otto Fricke, the FDP’s
parliamentary budget speaker said here ahead of a meeting of the budget
committee of the lower house, the Bundestag.
Norbert Barthle, the CDU/CSU’s parliamentary budget speaker, also
said ahead of the meeting that Germany favors a solution to make the
EFSF more effective “by insuring part of the risks of investors.”
Fricke signaled that the budget committee would likely approve such
a solution. “Anything which does not increase the volume of the EFSF can
be considered,” he said.
Barthle said that the CDU/CSU parliamentary group “most likely will
approve [an insurance solution] under these conditions.”
Yet, both Fricke and Barthle said that the budget committee might
vote on the guidelines of the EFSF possibly only next week given the
complexity of the matter. A meeting of the committee on Saturday might
also still be possible, Fricke said.
Under German law, the budget committee of the Bundestag needs to
approve any changes to the EFSF’s guidelines.
–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com
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