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Most viewed in Economics
France and the Netherlands strike backThe EU has made three mistakes in its approach to austerity and economic rebalancing. |
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Barroso pledges EU 'growth initiative'Commission president says there is growing support from EU leaders for pro-growth strategies. |
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No EU deal on banking rulesUK blocks compromise agreement on new bank capital requirements at meeting of EU finance ministers. |
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EFSF firepower
The European Financial Stability Facility (EFSF) could be boosted in two ways:
It could be used as an insurance that investors can apply for when they buy sovereign bonds in the primary market. The insurance would cover a portion of the principal value of the bond, but the precise amount would depend on market conditions and circumstances of the country.
One or several special purpose vehicles (SPVs) could be set up that will be able to fund EFSF operations. A dedicated SPV would have a mandate to fund member states in trouble and buy sovereign bonds. Its capital would come from existing EFSF funds as well as international investment from the private and public sectors. Officials say that this could attract sovereign wealth funds, risk-capital investors and “potentially” some long-term institutional investors. The SPV would be able to buy bonds on the primary and the secondary markets.
What happens next
3-4 November
Leaders of the G20 group of the richest and emerging economies meet in Cannes to discuss the deal agreed by the eurozone on 27 October.
17 November
The eurozone's 17 finance ministers meet to finalise the new-look European Financial Stability Facility (EFSF), to ‘leverage' its firepower. Finance ministers from all 27 EU member states meet the following day.
29 November
Eurozone finance ministers meet again and are expected to finalise the EFSF changes. Finance ministers from all member states meet the following day.
December
The presidents of the European Council, European Commission and Eurogroup present an interim report on steps to “strengthen the economic union”, including the possibility of treaty change.
March 2012
The report on how to implement measures to strengthen economic union to be finalised
End of June 2012
Deadline for banks to implement a “comprehensive set of measures to raise confidence” in the sector by increasing their core tier-one capital holdings to 9%.
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Germany will find itself under pressure to accept the idea of jointly issued debt.
Organisation's twice-yearly report says jointly guaranteed bonds would help strengthen eurozone.
US, UK leaders say failure to deal with crisis will infect economies across the globe.
Commission president says there is growing support from EU leaders for pro-growth strategies.
