You are currently viewing Euro rescue fund to get new chief as its old glory fades

Euro rescue fund to get new chief as its old glory fades


Euro rescue fund to get new chief as its old glory fades

BRUSSELS (AP) – A contest to lead the financial rescue fund in Europe is coming to an end with the centre of attention of three candidates. But a question that has hung during the months seems to persist: will the winner have enough to do despite the new economic clashes?

The finance ministers of the 19 countries that share the euro currency could decide Thursday in Luxembourg on a successor of Klaus regulating of Germany as managing director of the European stability mechanism, created during the Eurozone debt crisis a decade ago. They could also postpone the decision until July.

In the race to become the second Chief of the Fund are two former finance ministers, Pierre Gramegna de Luxembourg and Joao Leao de Portugal, and a senior official of the European Commission of Italy, Marco Buti.

One will take charge in October for five years since the European stability mechanism faces a paradox.

He rescued a handful of vulnerable countries with emergency help and kept the single European currency intact during the 2010-2015 debt crisis. But the ESM was stigmatized politically due to its link with nations with financial problems and the adjustment of the belt that was a condition for bailouts.

As a result, when the Coronavirus pandemic hit and the ESM had the power to offer up to 240 billion euros ($ 250 billion) for the euro countries to face, none requested support.

“The ESM was never popular and even today is not popular in some countries,” said Reging, 71, at a conference organized by Bruegel’s group of experts in Brussels this month.

It is a sign of both turbulent economic times and the institutional evolution of the European Union that the ESM, established in 2012, faces questions about its relevance after helping to safeguard the euro.

Economic shocks are such that the European Central Bank promised Wednesday to create market support to protect the member states from the growing indebted costs after the bank’s plan to increase interest rates for the first time in 11 years to combat record inflation. A massive sale in the bonds of some euro nations was a central characteristic of the debt crisis a decade ago.

During that crisis, the ESM and its predecessor raised emergency funds by selling bonded bonds jointly by euro governments to international investors. From 2010 to 2018, both organizations provided around 300 billion euros to five countries: Greece, Ireland, Portugal, Spain and Cyprus.

Also Read: River Trash Traps Chew At Huge Ocean Plastics Problem

The common debt principle supporting the ESM helped pave the way for European leaders to authorize more than 700 billion euros to address a very different type of crisis: the recession caused by the pandemic.

This program, called Nextnerationu, is directed by the European Commission, the executive arm of the 27 -nations block, and also implies the sale of bonds to help national capitals. Unlike the ESM, the Commission offers subsidies and loans, provides the funds to all EU countries and does not attach any budget austerity requirements that characterized the rescues of the Euro area.

Now, with the European economy facing more problems due to the Russian war in Ukraine, Next Generationu is being more closely aligned with an impulse by member countries to weave themselves of coal, oil and Russian natural gas.

When asked at a recent conference if the ESM should fuse with Next Generationu, regulating the idea. He said the ESM is for the “crisis-AD Hoc management”, while the other program focuses on the longer-term investment objectives. He said that combining the two “makes no sense” and would be like merging the International Monetary Fund with the World Bank.

Reging said that the value of the ESM is that it is not only implemented but is simply available.

“My biggest concern when I accepted the work, which is now 12 years ago, could be boring,” he said. “He became very exciting. And we had to be ready in a few months to broadcast the first bonds. “

That may be the best advice regulating can offer him his successor.

Source: AP News

Euro rescue fund to get new chief as its old glory fades



Source link