Oct. 14 (Bloomberg) -- European Commission President Jose Barroso said euro-area rescue fund is now “ready” to use its expanded powers after Slovakia’s lawmakers backed the enhanced European Financial Stability Facility yesterday.
“Slovakia has voted the package, so this fund is already operational,” Barroso said today in Saint-Cyr-sur-Loire, France. “We must optimize the efficiency by leverage effects.”
The EFSF has gained the power to buy sovereign bonds on the secondary and primary markets, offer credit lines to governments and grant aid for bank recapitalizations. The EFSF’s role up to now has been to sell bonds to finance rescue loans.
Barroso reiterated his call for “coordinated action” across Europe to recapitalize banks and said the requirement “before any bank recapitalization is that they must stop distributing dividends or bonuses. This is something citizens would not understand if they see the considerable sums used for support banks,” he said. He also repeated his demand for a tax on financial transactions, saying “the financial sector must also give a contribution.”
Barroso, who travels to Paris later today to meet with French President Nicolas Sarkozy, called on officials to work together with European Union institutions to solve the debt crisis.
“We must do more together,” Barroso said. “Nothing can bring results in Europe without a close cooperation between France and Germany; we all know that. But at the same time, we must work together with our institutions, it’s the only way to have all the other states follow us.”
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