German Chancellor Angela Merkel declined to take sides in a dispute over sovereign-bond buying by the euro area’s future rescue fund, saying “we have to respect” Finland’s opposition to such aid.
“The issue here was what is the most efficient, what is the best method to achieve something,” Merkel said in Berlin today after talks with Slovak Prime Minister Robert Fico. Conditions for emergency financial aid to euro countries will be decided case by case, she said.
Finland has demanded collateral for any euro-area rescue loans to aid Spanish banks on which taxpayers don’t have the first right of repayment. Finland and the Netherlands also oppose allowing the planned European Stability Mechanism to buy Spanish bonds in the secondary market to lower borrowing costs.
With Italian Prime Minister Mario Monti pressing for help to protect his country from the debt crisis, euro-area leaders agreed at a summit on June 29 to use the ESM’s tools “in a flexible and efficient manner” under eased conditions. The tools include sovereign-bond buying by the rescue fund.
“The discussions in Brussels were more general,” Merkel said. “It was about secondary as well as primary market intervention, if I understood it correctly. We have to respect the decisions of individual states. I haven’t had the opportunity yet to discuss this with the Finnish government.”
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