THE HEAD OF GERMANY’S central bank – and one of the most influential members on the board of the European Central Bank – has said the EU’s bailout fund will simply be made bigger if it does not prove large enough to meet the needs of struggling states.
Axel Weber, who has been president of the Deutsche Bundesbank since 2004, told an audience at the German embassy in Paris that the European Financial Stability Fund would be increased from its current amount of €750bn if the precarious state of Europe’s finances demanded a greater payout.
Reporting the story, Bloomberg adds that Klaus Regling, who runs the fund, told a German newspaper he believed the fund was large enough to account for the needs of all member states.
The comments will provide a welcome relief to struggling European economies, in particularly those of Ireland and Spain, for whom the prospect of the bailout fund is particularly significant.
Although Europe’s finance ministers have agreed in principle to Ireland being allowed to access the bailout funds, parties on all side of Ireland’s discussions have said that the enactment of Ireland’s Budget – with €6bn of adjustments – is a fundamental basis of the talks.
If the political instability in Ireland continues and the Budget is not passed by the Dáil, therefore, the bailout could fall through – putting Ireland at the ‘back of the queue’ in seeking help.
Spain, meanwhile, has seen the ‘contagion’ about the Eurozone default fears spread to itself, and is now in danger of having to seek a bailout itself. The size of a Spanish bailout alone would almost empty the $750bn fund, meaning there would be no cash left for Ireland to take.
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