France’s La­garde: EU res­cues ‘vi­o­lated’ rules: re­port

The Pak Banker - - International3 -

PARIS: Euro zone pol­i­cy­mak­ers de­lib­er­ately chose to "vi­o­late" the bloc's rules in res­cu­ing Greece and Ire­land, clos­ing ranks to pro­tect the sin­gle cur­rency area's fu­ture, French Econ­omy Min­is­ter Chris­tine La­garde was quoted as say­ing.

The EU's gov­ern­ing Lis­bon Treaty places con­straints on bailouts. Euro­pean lead­ers agreed at a sum­mit on Thurs­day to amend it by cre­at­ing a per­ma­nent fi­nan­cial safety net from 2013. In com­ments re­ported on Satur­day by the Wall Street Jour­nal, La­garde said the amend­ment amounted to a "ma­jor ad­just­ment," but that a change was nec­es­sary af­ter the tu­mult of this year's debt cri­sis.

The Greek and Ir­ish bailouts and the cre­ation of a tem­po­rary Euro­pean res­cue fund had been "ma­jor trans­gres­sions" of the treaty.

"We vi­o­lated all the rules be­cause we wanted to close ranks and re­ally res­cue the euro zone," La­garde was quoted as say­ing. "The Treaty of Lis­bon was very straight-for­ward. No bailout." The sum­mit ap­proved a two-sen­tence amend­ment to the treaty at Ger­many's be­hest to per­mit the cre­ation of a Euro­pean Sta­bil­ity Mech­a­nism to han­dle fi­nan­cial crises from 2013. The ESM, to re­place a tem­po­rary Euro­pean Fi­nan­cial Sta­bil­ity Fa­cil­ity cre­ated in May, will be em­pow­ered to grant loans on strict con­di­tions to mem­ber states in dis­tress, with pri­vate sec­tor bond­hold­ers shar­ing the cost of any sov­er­eign debt write-down on a caseby-case ba­sis. -Reuters

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