How the EU's debt firewall will work - hopefully

Bernd Riegert, Deutsche Welle, 28.06.2012

Link to original article


Eurozone countries want to install a new 700-billion-euro ($875 billion) firewall against the debt crisis in July. Until they do, the European Stability Mechanism is little more than a paper tiger. […]

But there are already doubts over whether the ESM will be big enough to finance future bailouts. Janis Emmanouilidis of the EPC think tank said that though the ESM has more tools than the EFSF, "the question that you have to ask is whether the ESM is big enough to calm the markets. I don't think it will be if the situation escalates in other EU countries, particularly Spain or Italy." […]

But it would be legally possible for the ESM to use its banking license to increase the size of the loans it can hand out. Emmanouilidis believes that it could well come to this one day. "I think that if you get to the point that you have to calm the markets even more, then you will have to use this option," he said. "Whether that will cure all the problems - I doubt it. I think that in the present situation only a variety of elements will help, and they will combine to represent the prescription."

For the entire article see here


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