Easing the conditions for the euro area’s rescue fund to buy Italian sovereign bonds risks swamping the financial backstop, Oxford University economist Clemens Fuest wrote in a commentary in Handelsblatt.

Using the planned European Stability Mechanism in an attempt to lower the borrowing costs of highly indebted countries might lead bondholders to sell massively to the ESM, exhausting its finances and forcing governments to commit more resources, Fuest, a member of the German Finance Ministry’s group of academic advisers, said in the op-ed article published in the Dusseldorf, Germany-based newspaper today.

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