According to the Financial Times, the EC is willing to swing into action with a plan for a monetary fund to assist highly indebted Eurozone nations. It is unlikely, however, that EU institutions will agree on a structured EMF quickly enough to address the current Greek problem.
The EC today signalled its willingness to swing into action with a plan for a monetary fund equipped with sufficient resources to assist highly indebted Eurozone nations such as Greece.
Commission officials said preliminary work was already in progress and a proposal for a European Monetary Fund could be in place by June, when EU heads of state and government are due to meet for a summit.
The creation of a European Monetary Fund would mark a significant step forward in the integration of the Eurozone economy. For the past 11 years it has had a single currency and a common central bank, but has lacked a fiscal union and clear-cut arrangements for assisting a member-state in severe financial difficulty.
Officials cautioned that EU governments and the Commission were unlikely to agree on the structure of a monetary fund quickly enough for it to be of immediate use to Greece, which must refinance more than €20bn of debt in April and May.
The shape of the German proposal is dictated partly by the reluctance of political leaders, central bankers and the general public to bail out Greece, widely seen as responsible for its own troubles, and partly by the recognition that constitutional lawsuits could be launched in Germany against any attempt to provide financial aid to a fellow Eurozone country.
However, diplomats predicted the German plan might encounter resistance elsewhere in the EU. Some countries might have misgivings about various punitive schemes under consideration in Berlin as accompaniments to a European monetary fund.
© Financial Times
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