Bloomberg News

Ireland Supports Accelerating Introduction of ESM, Kenny Says

October 13, 2011

Oct. 13 (Bloomberg) -- Ireland supports early introduction of the European Stability Mechanism, the region’s permanent rescue fund, while opposing bondholder writedowns for countries other than Greece, Prime Minister Enda Kenny said.

The euro area is considering bringing forward the ESM’s debut by a year to mid-2012. The 17-nation region also is considering asking bondholders to contribute more to a second international aid package for Greece crafted in July. The private sector involvement, or PSI, had been due to entail a 21 percent writedown through debt exchanges and swaps.

“In respect to the ESM, we don’t have any objection to an early introduction of that,” Kenny told reporters in Brussels today after meeting with European Commission President Jose Barroso. It should “be made perfectly clear that PSI is an issue of concern not only to Ireland but to other countries. And the same clarity of the exclusiveness and uniqueness of this in respect of Greece, as we referred to in July, should be made perfectly clear.”

Kenny also backed plans to expand the role of the temporary rescue fund, the European Financial Stability Facility by allowing it to buy sovereign bonds on the secondary market, offer credit lines to governments and provide for bank recapitalizations. The EFSF’s current role is to sell bonds to finance rescue loans.

“The maximum flexibility and maximum use of the existing tools that are there go a long way to dealing with the crisis that we face now,” Kenny said.

To contact the editor responsible for this story: Jones Hayden at jhayden1@bloomberg.net


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