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ECB finding ways to help boost IMF funds

12-20-2011 14:09 BJT

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Staying now with Europe where president of the ECB Mario Draghi said on Monday his institution is seeking ways to keep the eurozone's bailout fund effective even if France and other countries lose their triple-A rating.

Draghi was speaking to lawmakers at the European Parliament just as EU finance ministers were trying to figure out how to come up with 200 billion euros in new loans for the International Monetary Fund.

European Central Bank (ECB) President Mario Draghi (C) addresses the European
Parliament economic and monetary affairs committee in Brussels December 19, 2011.

But, as finance ministers struggle to boost their crisis firewall via the IMF, the eurozone’s temporary bailout fund, the European Financial Stability Facility (EFSF), risks losing its OWN triple-A status and ability to cheaply raise the money it needs to help struggling countries.

The rating of the Europe’s 440 billion temporary bailout fund depends on the ratings of its main contributors which includes France, Germany. But earlier this month, ratings agency Standard & Poor’s put 15 eurozone countries on downgrade watch, including France and Germany. France, with its relatively high deficit and the large exposure of its banks to weak countries on Europe’s periphery, is considered to be at particularly high risk of seeing its creditworthiness cut. Draghi warns that if France loses its rating it’s likely the ratings of other eurozone countries will be affected as well.

Draghi says The ECB, which is supposed to help the EFSF in future bond market interventions, is working actively on all possible scenarios involving a downgrade of eurozone countries.

Draghi said: "The new fiscal compact is an essential signal showing a clear trajectory for the future evolution of Euro area. All of this should contribute to making public finances in the Euro area credibly robust."

When asked by a Member of the European Parliament about the status of the euro, Draghi says he is fully confident in the Euro.

Draghi said: "Let me say first that I have no doubt whatsoever about the strength of the Euro, about its permanence, about its irreversibility. Let’s not forget this was the keyword at the time of the Maastricht treaty. The one currency is irreversible."

Draghi says the decision by EU leaders at their summit 10 days ago to bring forward Europe’s PERMANENT bailout fund, the European Stability Mechanism, by one year was the best response to the downgrade threat.

European Central Bank (ECB) President Mario Draghi gives the Ludwig Erhard Lecture
discussion in Berlin, December 15, 2011.

European Central Bank (ECB) President Mario Draghi (R) arrives at the European
Parliament economic and monetary affairs committee in Brussels December 19, 2011.

European Central Bank (ECB) President Mario Draghi (2nd L) arrives at the European
Parliament economic and monetary affairs committee in Brussels December 19, 2011.

European Central Bank (ECB) President Mario Draghi, center, prepares to take his seat
during a meeting of the Economic and Financial Committee at the European Parliament
in Brussels, Monday, Dec. 19, 2011.

 

Editor:Zhang Rui |Source: CNTV.CN

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