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Shorn of its top-tier credit rating, the EFSF is likely to be forced to pay higher premiums or operate with less cash at its disposal. S&P held out the possibility that eurozone governments could shore up the fund, something that officials have said they were exploring. But that possibility appeared remote after Wolfgang Schäuble, the German finance minister, argued that the EFSF already had ample resources, and that no further support from Berlin, its biggest sponsor, would be forthcoming.
“It is sufficient”, Mr Schäuble told Deutschland Radio. “The guarantee sum that we have is sufficient by far for what the EFSF has to do in coming months.”
The German finance minister also joined other top European officials, including Olli Rehn, the economics commissioner, in bashing the US rating agency for failing to understand the reforms under way in the eurozone, including the creation of a “fiscal compact” to give sharper teeth to budget rules.
Even before S&P’s move, European officials had accepted that it would be politically impossible to secure support in Germany and other triple A-rated countries to increase their exposure to the fund. As such, they are now focusing their efforts on bringing to life its €500 billion successor, the European Stability Mechanism, which is supposed to come into service on July 1 – a year ahead of schedule.
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