Exploratory discussions at a meeting in Brussels on Tuesday evening covered options to leverage the European Financial Stability Fund further or establish new ways to provide credit lines, including by funnelling European Central Bank loans via the IMF to struggling countries.
Olli Rehn said talks were already under way to try to furnish the IMF with more lending capacity, but declined to specify who might provide it. “We are – together with the IMF – consulting potential contributors through bilateral loans”, he said. “Among the euro area Member States, there’s very broad support to increase the IMF’s resources through bilateral loans.”
Ministers endorsed the two options to expand the European Financial Stability Facility rescue fund – an insurance scheme on bond losses and a vehicle for outside investors – that eurozone leaders initially hoped would leverage the €250 billion spare capacity of the rescue fund four or five fold, to more than €1,000 billion.
But Klaus Regling, head of the EFSF, told the meeting that the sharp deterioration in market conditions over the past month meant that the final firepower of the rescue fund was likely to be well short of this €1,000 billion target.
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