Bundesbank Sees No ‘Urgent Need’ for Final Decision on European IMF Loans
The Bundesbank said it sees no urgent need for a decision on a loan to the International Monetary Fund, suggesting the Dec. 19 deadline set by European Union leaders may be missed.
“We don’t see an urgent need for a final decision,” a spokesman for the Frankfurt-based Bundesbank said by telephone. “We want to evaluate the whole situation.”
EU leaders decided at a Dec. 9 summit to channel an additional 200 billion euros ($261 billion) in loans to the IMF so that it has the resources to help fight the euro region’s debt crisis. Central banks from the 17 euro nations would provide 150 billion euros and 50 billion euros would come from EU members outside the currency bloc. Bundesbank President Jens Weidmann has said the German central bank is ready to contribute as much as 45 billion euros if certain conditions are met.
The Bundesbank wants large countries outside the euro region and the EU to take part in the loan to avoid accusations that euro-area central banks are merely funding governments via the IMF, something that would be contrary to the euro’s founding treaty. It’s important that there is a “fair distribution of the burden amongst the IMF members,” Weidmann said earlier this week. The U.S. has said it won’t participate.
The Bundesbank has not yet received a response from German Finance Minister Wolfgang Schaeuble to a Dec. 9 letter that set out its conditions for the loan, the spokesman said.
Luxembourg’s Jean-Claude Juncker, who leads the group of euro-area finance ministers, today expressed confidence that the deadline for agreement on the loan would be met. Juncker also said he hadn’t spoken with Weidmann about it.
The euro rose on Juncker’s comments, only to give up those gains when the Bundesbank said it won’t rush to a decision. The currency traded at $1.3032 at 4:10 p.m. in Frankfurt.
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