Main focus of Wednesday, July 11, 2012

Euro Group pushes ahead with ESM expansion

Spain's Finance Minister De Guindos and Italian Prime Minister Monti - their countries had called for the ESM to be allowed to buy government bonds. (© AP/dapd)

At their meeting in Brussels the Euro Group finance ministers have initiated the expansion of the ESM, paving the way for the bailout mechanism to purchase government bonds in future. Euro Group chief Jean-Claude Juncker also sees the direct recapitalisation of ailing banks as a possibility. This development of the ESM is precisely what the struggling states need, commentators write, evoking an experiment with Spain as the guinea pig.

Struggling states relieved about easier assistance

At their meeting in Brussels, the finance ministers of the Euro Group have taken further steps towards enabling the ESM to purchase the government bonds of countries encountering difficulties. Italy and Spain had pushed through this expansion of the euro bailout fund's powers at the EU summit at the end of June. The liberal daily La Stampa is delighted to see that Italian Prime Minister Mario Monti's efforts have evidently borne fruit: "This is a bailout mechanism that can be applied in the interest of the Eurozone to mitigate problems caused by third parties. For this reason the mechanism has two main features: it is not the country in question that asks for assistance, but rather the fund responsible for the Eurozone's systemic stability that decides when this help is necessary. Moreover the mechanism does not depend on the fulfilment of austerity requirements because it is used by countries that adhere to the EU Stability Pact. … Monti's attempt to persuade his European colleagues to interpret the EU treaties in such a way that makes this new form of assistance possible appears to have been successful." (11/07/2012)

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Who's saying what » The row over debt mutualisation

The apparently successful Spain experiment

The agreement on the bank bailout in Spain could serve as a model for bank supervision throughout the Eurozone, the business paper Cinco Días writes: "The memorandum regulating the EU's conditions for saving the struggling Spanish banks is the best guideline for the future common bank supervisory authority. This mechanism will facilitate the recapitalisation of banks in difficulties without the need to apply to the states, isolate the banks' risk so it doesn't contaminate government bonds, and harmonise the solvency and credit conditions for all financial institutes on the continent. Spain has been used as a guinea pig for taking the first steps towards something the northern countries had resisted, namely a European banking union and centralised supervision, as a precondition for the rescue of ailing Spanish banks, in particular the already nationalised savings banks." (11/07/2012)

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More from the press review on the subject » EU Policy, » Fiscal Policy, » Banks, » Spain, » Europe
Who's saying what » Spain in the banking crisis, » The row over debt mutualisation

A divided community lacking energy

Luxembourg's Prime Minister Jean-Claude Juncker will remain the head of the Euro Group for the time being. The fact that the finance ministers couldn't agree on a replacement although Juncker wants to step down shows how at odds the Eurozone countries are, the left-liberal daily Der Standard comments: "The weary Junker is involuntarily becoming the symbol for what is most lacking in the countries of the Eurozone: mutual trust. But if a supposedly powerful Monetary Union can't manage to solve a simple personnel problem, how are its members supposed to agree on all the complex and horrifically expensive technical decisions required to master the crisis? ... The Eurozone comes across as a quarrelling, drifting community with leaders who show no backbone when it comes to making decisions. As long as things remain that way, you can fork out as many billions in bailout funds as you like - it'll hardly help at all." (11/07/2012)

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More from the press review on the subject » EU Policy, » Fiscal Policy, » Luxembourg, » Europe
All available articles from » Thomas Mayer
Who's saying what » The row over debt mutualisation

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