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Of the $1 trillion, or €800 billion, some €300 billion is either already spent or already committed. The decision taken on Friday means that, instead of €200 billion of the committed money eating into the European Stability Mechanism's €500 billion total (the rest of that €300 billion is made up of bilateral loans), it will be kept separate, permitting the ESM to retain an actual capacity of €500 billion.
Friday's decision was the least ambitious of the three options that had been put forward prior to the meeting. The most far-reaching approach had been to increase the lending capacity to €940 billion. It ended up a long way short of that. The successive affirmations from so many of the eurozone's finance ministers and officials before, during and after the meeting that they had definitely not allowed complacency to set in left the sneaking suspicion that, perhaps, complacency has indeed set in.
According to Jörg Asmussen, a member of the European Central Bank's executive board: “Recent developments on the financial markets confirm that there is indeed no need for complacency on the issue of establishing euro-area firewalls as one element of our crisis-management tools”.
The whole point of the creative stretching of the figures is to convince the other members of the G20 group of rich and emerging countries that the eurozone is serious about putting its own house in order – in order to persuade the rest of the world to bolster the International Monetary Fund's coffers. That would, in turn, allow the IMF to increase its own support for the eurozone.
A decision will be taken when the G20, World Bank and IMF meet on 20-22 April. Asmussen said: “We Europeans can travel to the [World] Bank and the [International Monetary] Fund having done our homework on European firewalls and this then can be complemented by the global firewalls of the IMF resources”.
It remains to be seen whether the rest of the world's leaders consider the firewall increase to be as significant as they demanded, or whether they conclude that complacency has won the day.
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