European finance ministers agreed on funding sources for a new, permanent eurozone rescue fund at a Monday meeting in Brussels. The European Stability Mechanism (ESM) is effectively a 700-billion euro ($995-billion) rainy-day kitty, set aside to help any eurozone countries struggling with national debt. Member states will provide 80 billion euros in hard currency and 620 billion in either “on-call capital” or state guarantees. These reserve funds would only be liquidated when required. The ESM is meant to be able to provide half a trillion euros of emergency loans, if necessary. “To have that effective lending capacity … experience tells us we need to allow for this kind of margin,” Luxembourg Prime Minister Jean-Claude Juncker told reporters after Monday’s meeting. Juncker heads the Eurogroup group of finance ministers from the 17 countries using the single European currency, the euro. The ESM is set to replace an existing rescue fund as of January 1, 2013. The current, temporary safety net – cobbled together in haste after Greece called for international financial assistance and before Ireland followed suit – is called the European Financial Stability Facility (EFSF), and has already been used to aid the government in Dublin. European politicians are also… Read full this story
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