Bloomberg News

German Committee Vote on EFSF Guidelines Excludes Leveraging

October 21, 2011

(Updates with comment from spokesman in second paragraph.)

Oct. 21 (Bloomberg) -- The budget committee in Germany’s lower house of parliament approved guidelines for the region’s rescue fund that exclude proposals on how to leverage its firepower, said Ulrich Scharlack, spokesman of the parliamentary group of Chancellor Angela Merkel’s Christian Democratic Union.

“We assume that the leveraging” of the European Financial Stability Facility “will be decided at the Brussels summit on Oct. 23,” Scharlack said by telephone today, adding that this decision would then have to be presented to the budget committee in Berlin for approval before Merkel could return to Brussels for a second European summit on Oct. 26.

European leaders will hold two summits in four days in an effort to break a deadlock on how to tackle the region’s debt crisis. The budget committee called on Merkel to ensure there is no EFSF leveraging via the European Central Bank and that the fund isn’t allowed to operate as a bank.

Germany’s guarantees to the EFSF of as much as 211 billion euros ($292 billion) must not be exceeded, the committee said.

“These things have to be decided before Merkel goes to Brussels” for the Oct. 26 summit, Scharlack said, adding that such decisions could not be taken retroactively.

--Editors: Simone Meier, James Hertling

To contact the reporters on this story: Leon Mangasarian in Berlin at lmangasarian@bloomberg.net; Rainer Buergin in Berlin at rbuergin1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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