German officials, who have until now said there is no need to bolster the permanent European Stability Mechanism when it comes into force in July, now conclude that they can’t hold their line against efforts by fellow European Union members, the International Monetary Fund and the U.S. to raise the firewall, Welt said, citing unidentified government officials.
Some of Germany’s international partners are pressing for the ESM to be allowed to run concurrently with the remaining funds in its predecessor, the temporary European Financial Stability Facility. However, Germany still seeks to prevent running the two funds together, a prospect that would yield a firewall of 940 billion euros, according to Die Welt.
Under the compromise favored in Berlin, Merkel’s government would allow the permanent ESM to use the full 500 billion euros at its disposal, Welt said. Since the EFSF will have already committed 200 billion euros, Germany will argue that the total firewall would amount to 700 billion euros, it said.
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