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Hold the phone: EU finance ministers to hold teleconference over debt crisis

The talks are expected to focus on measures to boost the International Monetary Fund’s firepower.

Minister for Finance Michael Noonan will be expected to participate in the talks.
Minister for Finance Michael Noonan will be expected to participate in the talks.
Image: Eamonn Farrell/Photocall Ireland

EUROPEAN UNION FINANCE Ministers are to hold a teleconference today with discussions on the measures agreed at a recent summit in Brussels expected to be on the agenda.

The main focus of the call is expected to be approving a €200 billion loan to the International Monetary Fund (IMF) aimed at boosting its firepower to help prevent further turmoil within the eurozone.

Members and non-members of the single currency will be expected to contribute to the loan, a key demand of Germany according to Reuters but there is much to be discussed about just how much each country will contribute to the fund.

According to The Telegraph, Britain will be expected to be the second largest contributor which will prove difficult politically for David Cameron who vetoed the draft agreement for greater fiscal integration at the Brussels summit on 9 December.

Also on the agenda will be a new voting method for the European Stability Mechanism (ESM), the EU’s new €500 billion permanent bailout mechanism which is now scheduled to replace the European Financial Stability Fund (EFSF) next year, earlier than originally planned.

At present voting in the EFSF is subject to unanimity but its expected that a qualified majority voting method will replace this to prevent smaller countries from blocking major decisions. Finland objects to this change according to Reuters.

The talks come amid a warning from the president of the European Central Bank Mario Draghi of the implications of a break-up of the eurozone, saying in an interview with the Financial Times that countries who leave the single currency would face “a big inflation”.

In a departure from the previously reserved line of his predecessor the Italian’s willingness to discuss the possible break-up of the single currency underlines the high stakes of the crisis, the paper says.

All of this also comes amid a threat of a downgrade of all eurozone nations’ credit rating by the agency Standard and Poor’s which put the major EU economies on a watch for downgrades on 7 December. Fitch warned it may soon downgrade six EU countries last week.

Ratings agency may downgrade Ireland – and 5 other eurozone countries

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Hugh O'Connell

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