Euro-area finance ministers should commit to an emergency lending capacity of at least $1 trillion to reassure investors in the face of the region’s debt crisis, Irish Finance Minister Michael Noonan said today.
“The market reaction to these is to the dollar amounts, so anything that gets you $1 trillion looks like a serious firewall,” Noonan told reporters before a meeting of European finance ministers in Copenhagen today. “The maximum that could be on the table today would be 940 billion euros ($1.3 billion). That would be a very impressive figure and would send a very clear signal to the markets.”
Finance ministers neared an agreement to run the temporary and permanent funds in parallel until mid-2013, potentially raising the upper limit on emergency lending to 940 billion euros. Amounts immediately available would range from 340 billion euros to 640 billion euros. Noonan said a suggestion of his German colleague Wolfgang Schaeuble of a firepower of 800 billion euros would probably be sufficient.
“That seems to me to be getting into the ballpark of what is required,” he said. “But I’m not quite sure what the composition of the eight is yet.”
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