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Merkel, Monti, see ESM differently
German Chancellor Angela Merkel said she believed the European Stability Mechanism could not be granted a banking license that would allow it to issue bonds.
Italian Prime Minister Mario Monti and other leaders in Europe have said the bailout fund assembled by the European Commission to rescue countries burdened by high government debts could be used to issue bonds, which would give the ESM a great deal more leverage, The New York Times reported Wednesday.
But European Central Bank President Mario Draghi and now Merkel have said the ESM could not be treated as if it were a bank.
“The current design of the ESM does not allow it to be recognized as a suitable counter-party,” Draghi said.
Merkel made reference to the Draghi’s statement after meeting with Monti in Berlin Wednesday.
Merkel, however, did say that Italy had made “wide reaching” efforts to trim its high debt load.
“I am personally convinced that these reform efforts will bear fruit, that they will improve Europe’s overall competitiveness,” she said after two hours of talks with Monti.
Monti’s visit comes soon after last week’s meeting with Greek Prime Minister Antonis Samaras.
Merkel used that meeting to praise Greece’s progress in bringing its debt burden under control.
Monti, in turn, thanked Germany for taking a leadership role in Europe’s financial crisis. But he also suggested he would continue to press forward with the proposal that the ESM be treated as a bank.
“All of these issues must be viewed as a mosaic. All of these, the ESM, a banking license, are individual mosaic tiles that make up a complete picture,” he said.
Copyright 2012 by United Press International