BERLIN (MNI) – The German government said Monday that talks about
optimizing the capacity of the European Financial Stability Facility
(EFSF) are focusing on two options.
“These two models do not automatically exclude each other,”
government spokesman Steffen Seibert said at a regular press conference
here. And neither option would involve the European Central Bank, he
stressed.
Negotiations on these models are still underway in Brussels,
Seibert noted. The goal is to finalize the negotiations soon enough to
allow the budget committee of the German parliament to approve the
choice ahead of Wednesday’s EU summit, he said.
Under German law, the budget committee of the lower house, the
Bundestag, has to approve any changes to the EFSF.
In any event, there will not be new cash for the EFSF. Germany’s
contribution to it will remain limited to E211 billion, finance ministry
spokesman Martin Kotthaus said at the same press conference.
EU finance ministers will “most likely” meet again ahead of
Wednesday’s summit of EU leaders, Kotthaus said.
“Intensive discussions” with the banking sector are also still
underway in Brussels about a larger private sector involvement in the
rescue for Greece, Seibert said. “The goal remains to reach a voluntary
agreement,” he reaffirmed.
Market News International reported Sunday that banks, under
pressure from Eurozone leaders, were prepared to compromise and accept a
haircut of 50% on their Greek bond holdings. But Charles Dallara, head
of the Institute of International Finance, which is negotiating on the
part of the banks, said Sunday that only “limited progress” had been
made in the haircut negotiations.
Regarding Italy, Seibert said the German government has “great
confidence” that the Italian government will undertake further
consolidation measures to bring down the country’s elevated public debt.
–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com
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