EU discusses rescue system
Finance ministers from the EU’s 27 member states will meet this evening to discuss details of a permanent crisis mechanism for the eurozone, EU officials say.
The meeting, which will take place after a session of finance ministers from the 17 countries that use the euro, will focus on the European Stability Mechanism (ESM).
The ESM will succeed the temporary crisis mechanism, the European Financial Stability Facility (EFSF), which expires in 2013.
The eurozone finance ministers’ meeting starts at 2pm. The session on the ESM is expected to start this evening.
Ministers are expected to discuss the size of the ESM and what steps it can take to help eurozone countries that are struggling to manage their debts. The EFSF has €440 billion in funds but it can only lend around €250bn because it needs to keep some reserves to maintain its triple-A status.
The EFSF can only issue bonds in the primary market and lend the proceeds to eurozone countries. The European Commission and Jean-Claude Trichet, the president of the European Central Bank, want the EFSF and the ESM to be able to carry out more activities.
The Commission has proposed that the ESM should be able to buy eurozone government bonds on the secondary market if a country is struggling to find buyers. It has also suggested that the ESM should be able to offer short-term credit lines to eurozone members.
The EU’s national leaders are expected to agree a package of measures to boost the stability of the eurozone when they meet on 24-25 March. This package should include changes to the EFSF, the details of the permanent mechanism as well as possible modifications to the terms of bail-outs for Ireland and Greece.
The EU’s finance ministers will hold their usual monthly meeting tomorrow. The agenda includes economic governance rules, savings tax, anti-fraud agreements, an appointment to the executive board of the European Central Bank, member states’ compliance with the rules of the EU’s stability and growth pact, preparation for a meeting of the G20 countries, approval of the EU’s accounts for 2009 and budget guidelines for 2012.