Verhofstadt: "Ecofin fools itself - decision to merge the EFSF and ESM is still just another stop-gap remedy to the crisis" / 30-03-2012
"The decision of Ecofin of today to merge the EFSF and ESM will not provide long-term stability to bond markets if the crisis sucks in larger Eurozone economies" said ALDE Group Leader Guy Verhofstadt following the consensus announced at today's informal ECOFIN meeting in Copenhagen.
According to Verhofstadt: "National finance ministers today have repeated the same mistake as in the past by failing to create a permanent firewall but rather just another expensive fire extinguisher that does not protect the bigger EU economies from contagion".
"At the next formal Council meeting EU ministers, instead of fooling themselves, must look at long-term and structural solutions and stop just buying time. The German-inspired proposal for a European Collective Redemption Fund (ECRF) has considerable merit and ticks all the boxes. It would be a temporary facility that mutualises the debt over 60% for those countries not part of an existing bailout programme. It would enable indebted countries to pay back what they owe at a sustainable interest rate without undermining their ability to invest in economic growth and jobs. Furthermore, the risks and costs of such a mechanism would be born by bondholders, by way of lower returns, rather than by taxpayers."
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