Eu­ro­zone con­sid­ers rainy day fund for fu­ture crises

Kathimerini English - - Focus -

LON­DON (Reuters) – Dis­cus­sions have started on a type of rainy day fund that could help the eu­ro­zone ad­dress shocks such as the Greek debt cri­sis in the fu­ture, the head of the eu­ro­zone res­cue fund, the Euro­pean Sta­bil­ity Mech­a­nism, said. In com­ments made at Lon­don’s Chatham House think tank on Tues­day and pub­lished yes­ter­day, ESM chief Klaus Regling said that a mech­a­nism to counter “asym­met­ric shocks” was “an im­por­tant gap in the euro area’s fis­cal tools.” “A dis­cus­sion about a lim­ited fis­cal ca­pac­ity that would ful­fill this func­tion has be­gun,” Regling said. “The tool can be de­signed with­out debt mu­tu­al­iza­tion, and with­out per­ma­nent trans­fers be­tween coun­tries,” he added. “In this con­text we could look at ex­am­ples that ex­ist in the US, for in­stance rainy day funds, or a com­ple­men­tary un- em­ploy­ment scheme.” Fig­ures of around 100-200 bil­lion eu­ros have been sug­gested pri­vately by eu­ro­zone of­fi­cials as a start­ing size for any such fund. In the longer run Regling said the eu­ro­zone could also de­velop a “Euro­pean safe as­set,” but that “it would re­quire some debt mu­tu­al­iza­tion.” Debt shar­ing is cur­rently not sup­ported by the bloc’s main mem­bers such as Ger­many. It “can­not hap­pen un­less there is a lot more con­fi­dence that all euro area coun­tries com­ply with the rules they have agreed to,” Regling said.

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