Finance ministers of Germany, France, the Netherlands and three other euro-area nations with AAA credit ratings will meet today to discuss ways to make better use of the European Union’s rescue fund.
The talks will happen before the region’s finance ministers gather for a monthly meeting in Brussels. The group will discuss how nations can tap more aid from the 440 billion-euro ($586 billion) European Financial Stability Facility, which in November provided assistance to Ireland, said an EU diplomat, who declined to be identified because the meeting is private.
The rescue fund needs to be “more flexible,” French Finance Minister Christine Lagarde said today on Europe1 radio. The need for a capital buffer to cinch a AAA rating cuts the lending capacity of the rescue fund to about 250 billion euros.
A rising euro and successful bond auctions in Portugal, Spain and Italy offered a respite last week from market pressure for steps that go beyond the emergency aid program and the European Central Bank’s unprecedented bond purchases. Euro-area finance ministers are scheduled to start their regular meeting at 5 p.m. in Brussels.
Germany, France, the Netherlands, Austria, Finland and Luxembourg have the highest rating of any euro region nation on their long-term debts.
Top-rated European nations risk having their credit ratings downgraded in the event that EU policy makers expand bailout funds, Stephen Jen, a managing director at BlueGold Capital Management LLP, said in an e-mailed note on Jan. 10.
Should the fund for the European Financial Stability Facility be increased to 700 billion euros or more from the current 440 billion euros, “one or more of the currently AAA rated government debts may be downgraded,” Jen wrote, citing his own calculations.