On Friday EU finance ministers will meet informally in Copenhagen and discuss a plan to boost the Euro zone rescue fund for the year to 940 billion euros ($1.3 trillion USD) to provide some additional firewall rescue protection for containing a future debt crisis.
The 940 billion Euro rescue boost consists of no extra pledges from wealthier Euro zone countries such as Germany. The rescue book relies instead on a plan to combine the Euro zone rescue funds.
By activating the permanent European Stability Mechanism (ESM) 500 billion euros and the 240 billion euros left from the temporary European Financial Stability Facility (EFSF), which is set to expire next year, the groundwork will be paved for the IMF and international funds to provide additional financial contributions to the euro zone rescue firewall.
Assuming the temporary (EFSF) fund expires in mid-2013 without further commitments, the permanent aid ceiling would revert to 700 billion euros, according to the draft. But capital requirements can be raised or lowered based on the ESM’s guidelines.
On Tuesday OECD (Organisation for Economic Co0peration and Development) Secretary-General Angel Gurría spoke about the need for a greater financial firewall across the Euro zone.
“The current level of commitment to the rescue funds is not enough to restore market confidence” Gurria said.
“A credible financial firewall will provide governments with the breathing space they need to focus crucially on revitalising Europe’s economic growth and competitiveness” he emphasized.