EU could source bailout funds from Asia and the Gulf

Guardian
October 22, 2011

The EU could tap sovereign wealth funds from Asia and the Gulf in order to boost the financial clout of its main vehicle to bailout eurozone countries suffering debt distress and prevent contagion spreading, it is understood.

Finance ministers from the 17 eurozone countries are discussing the option of creating a "special purpose vehicle" for the European Financial Stability Facility (EFSF) in order to boost its current €440bn (£383bn) lending capacity.

The idea, according to sources, would be to attract further money from official and private investors, with the sovereign wealth funds of countries such as China, Singapore or Qatar a prime target. Some of these already invest in European banks such as Barclays and UBS.

The only other option now being discussed is to turn the EFSF into an insurer that would offer to insure the first, perhaps 20%, of losses on new government debt held by private creditors such as banks.

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