Bloomberg News

Germany Considers Running European Rescue Funds in Parallel

February 01, 2012

(For on Europe’s debt crisis, see EXT4.)

Jan. 23 (Bloomberg) -- The German government is considering proposals to run the temporary and permanent European rescue funds in parallel if needed, potentially creating a bigger firewall against the debt crisis.

European Union leaders are due in Brussels on Jan. 30 for a summit and “we can talk about all those things at that meeting,” Steffen Seibert, chief government spokesman, told reporters in Berlin today, when asked about the funds running in tandem. “I’m not going to give away any German negotiating position. You should just know that we have been anticipating a sequencing and we see no reason to change that.”

EU leaders agreed at their last summit in December to bring forward introduction of the 500 billion-euro ($650 billion) permanent fund known as the European Stability Mechanism by a year. The ESM is now intended to replace the 440 billion-euro European Financial Stability Facility in mid-2012.

Running the funds in parallel “is being discussed,” Norbert Barthle, the budget spokesman in parliament for Chancellor Angela Merkel’s Christian Democratic Union, said in an interview in Berlin today. The funds would only be run together “in an emergency,” he said.

Germany doesn’t believe that Europe’s rescue funds for indebted countries need increased firepower, Seibert said at the same briefing.

Germany “currently is not of the conviction that the ESM has to be doubled,” Seibert said in response to a question.

--Editors: Alan Crawford, James Hertling

To contact the reporter on this story: Brian Parkin in Berlin at bparkin@bloomberg.net

To contact the editor responsible for this story: Alan Crawford at acrawford6@bloomberg.net


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