January 23, 2012
Germany floated the idea of combining Europe’s two rescue funds, in a concession to bolster the fight against the fiscal crisis as Greece bargained with bondholders over debt relief.
Germany may be open to boosting the combined aid limit from 500 billion euros ($651 billion) when a permanent fund runs alongside the temporary fund starting in July, government officials in Berlin said. The need for a beefed-up fund was dramatized by haggling between Greece, the trigger of the two- year-old crisis, and its creditors over debt reduction to stave off default.
“It’s essential that we will be able to reinforce our financial firewalls,” European Union Economic and Monetary Affairs Commissioner Olli Rehn told reporters before a meeting of finance ministers in Brussels today.
Finance chiefs will tackle the rescue funds, Greece’s latest offer to bondholders, a German-inspired deficit-control treaty and nominees to the European Central Bank’s board in meetings that started at 2:30 p.m. and will run until late evening.
Italy led a rally in bonds of fiscally struggling states, the euro rose above $1.30 and European stock markets advanced amid confidence that a formula for quenching the crisis is coming together.
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