Finland’s parliament approved the expansion of Europe’s temporary rescue fund, bringing to nine the number of euro members to have ratified the mechanism.
Lawmakers in the Helsinki-based assembly voted 103 to 66 to back measures that broaden the scope of the European Financial Stability Facility. None abstained, while 30 lawmakers were absent.
Today’s parliamentary vote in the northernmost euro member didn’t address Finland’s insistence that it get collateral in exchange for its contribution to a second Greek bailout. The condition has threatened to derail Europe’s crisis-fighting efforts and roiled European financial markets.
The result of Finland’s EFSF vote “improves confidence” in Europe’s crisis-fighting ability, Prime Minister Jyrki Katainen said in an interview. Finland’s collateral demands are likely to be agreed on “within days or weeks,” he said.
The Finnish parliament will vote on each bailout paid from the EFSF, and its collateral demands will be addressed by lawmakers on a case by case basis, Finance Minister Jutta Urpilainen said Sept. 20.
The euro traded 0.5 percent higher against the dollar, its strongest level in a week, at 1.3657 at 12:35 p.m. in London. Yields on Greek, Irish and Portuguese bonds eased.
‘No Clear Solution’
“When we discuss the second package for Greece, that is the point when we need collateral,” Kimmo Sasi, head of the parliament’s Finance Committee and a lawmaker from Prime Minister Jyrki Katainen’s National Coalition party, said in an interview with Bloomberg Television today. “Now it’s only a question of the mechanism. When the mechanism is used for new countries and new measures, at that stage we raise the question of collateral.”
Negotiations over collateral “are still going on, but there is no clear solution at this moment,” Sasi said.
Spain, France, Italy, Belgium, Luxembourg, Greece, Ireland and Slovenia have already approved the enhanced powers for the 440 billion-euro ($597 billion) fund. All euro nations need to approve the plan adopted by European leaders on July 21.
Under its expanded powers, the EFSF would take over bond buying responsibilities from the European Central Bank and be able to lend to nations before they need a bailout.
German lawmakers will vote on the EFSF tomorrow.