ECB May Skirt Funding Role With IMF Help, Puts Focus on Euro-Zone Fiscal Rules

Posted by: Ben Vickers on December 2, 2011

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The European Central Bank may have found a way around the restrictions on it helping fund euro member governments: national central banks will give money to the International Monetary Fund and ask them to do the job. As James Neuger reports:

A European proposal to channel central bank loans through the International Monetary Fund may deliver as much as 200 billion euros ($270 billion) to fight the debt crisis, two people familiar with the negotiations said.

This would appear to be part of the “other elements” ECB President Mario Draghi told lawmakers yesterday in Brussels might follow a “new fiscal compact” to help restore credibility of the euro zone.

This plan would allow France and Germany to put aside their differences on the role of the ECB for now, and concentrate on the tighter fiscal rules German Chancelllor Angela Merkel is demanding. The plan may push dissent over the technicalities of how to help fund struggling euro members into the background at the Dec. 9 leaders’ summit, and allow for a stronger consensus on budget rules.

The question that remains is how much money pledged through this route will convince investors that the euro zone will remain intact.

Photographer: Hannelore Foerster/Bloomberg

Reader Comments

Firozali A.Mulla DBA

December 5, 2011 6:32 AM

The German Chancellor wants the European Union to oversee the budgets of all 17 euro-currency nations. On Sunday, Deputy Prime Minister Nick Clegg warned the eurozone is "skating on very thin ice" ahead of the summit, which is being seen as possibly the last chance to avert a breakdown of the euro. Do something Cameron. The working people of this country are suffering while you throw our money all over the globe. If this costs us more money we don`t have, you (and the mighty nobody voted for Clegg) will cause real trouble. Re-negotiation will not appease

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