Belfast Telegraph

Eurozone must dig deeper to make bailouts work

By Staff Reporter

Big European countries such as Spain, Italy and France will not need to tap into the rescue fund, EU monetary affairs Commissioners Olli Rehn said in an interview.

"We don't expect that these countries will need help from the stability mechanism," he said, despite the ongoing fears of a eurozone debt crisis.

"They are taking the right measures themselves to get their budgets and economies in order.

"That is the way to restore and strengthen market confidence."

Mr Rehn also told Bild magazine that he expects eurozone countries to soon widen the scope of the European Financial Stability Fund (bailout fund).

It is currently worth €440bn but some economists believe it needs to be increased to over €1 trillion.

This was agreed by EU leaders at a July 21 summit but has yet to be implemented by individual eurozone countries. German Chancellor Angela Merkel and French Prime Minister Nicolas Sarkozy meet today to discuss eurozone issues.

At the weekend, the president of the German parliament, Norbert Lammert, dampened hopes of a discussion on the stability fund in Germany in late September.

Meanwhile, Germany has reiterated its opposition to the idea of a eurobond as a means to ending the current debt crisis.

Finance Minister Wolfgang Schaeuble said issuing jointly guaranteed European sovereign bonds was a means to end the crippling debt crisis as long as the currency zone's 17 nations still run their own fiscal policies.

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