EU leaders agree on need for more money - just not how much
Some European leaders want to give the permanent bailout fund as much money as possible, but others say that will do nothing to deter a repeat of the current debt crisis.
Europe needs a strong financial firewall to withstand the current and any future debt crisis – this much European leaders agreed on when they decided to launch the permanent rescue fund, the European Stability Mechanism (ESM), this summer, a year earlier than planned.
What they disagreed on was how high these walls should be. A meeting of EU finance ministers and central bankers this Friday in Copenhagen is supposed to find consensus, but the language used in the run-up suggests the parties' positions are far apart.
"The mother of all firewalls should be in place, strong enough, broad enough, deep enough, tall enough, just big,” Angel Gurria, Secretary General of the Organisation for Economic Cooperation and Development (OECD), told reporters earlier this week in Brussels.
He called for a European bailout fund of €1 trillion ($1.3 trillion), arguing that “when dealing with markets, you must overshoot expectations.”
The permanent bailout fund is meant to replace the European Financial Stability Fund (EFSF), formed as a temporary solution to the eurozone's sovereign debt crisis. The EFSF has so far provided financial aid to Portugal and Ireland after those two countries were downgraded by rating agencies and found themselves unable to raise money at the financial markets.