Monday, December 6, 2010

FT: Euro funding arguments

...The German rejection leaves the European Central Bank’s aggressive purchase of eurozone sovereign debt as the main weapon for the EU...

The debate over additional measures began at the weekend, when Didier Reynders, the Belgian finance minister, expressed support for increasing the size of the €440bn bail-out fund.

Because of the fund’s complex rules, the amount available to lend to cash-strapped countries is far less than €440bn and Mr Reynders’ support follows similar signals from members of the ECB.

Mr Reynders’ comments were followed by the publication in the Financial Times of a proposal by Jean-Claude Juncker, the Luxembourg prime minister who chairs the 16-member eurogroup, and Giulio Tremonti, the Italian finance minister, proposing Eurobonds as a way to lower borrowing costs for peripheral economies.

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