Olli Rehn, European Commissioner for Economic Affairs, confirmed that the possibility of increasing the operational capacities of the State-saving fund, using financial leverage, is being evaluated. This option emerged over the weekend at G20 meetings in Washington and at IMF assemblies. "We are reflecting on the possibility of providing the European Financial Stability Facility (EFSF) with a leverage effect - Rehn told the German newspaper Die Welt - in order to give it more strength".
European countries have yet to ratify the decision, taken on 21 July last, to extend the operational capabilities of the EFSF so as to allow it to purchase government bonds of countries in difficulty. However, since that day, the picture has deteriorated markedly. Precisely for this reason, the idea of using financial leverage took shape. For now, however, the technical details have not yet been presented. In these two days various possibilities have circulated, from the one that the EFSF provides guarantees to the ECB which would then physically carry out the bond purchases, or that the Fund makes loans guaranteed, again by the ECB, in favor of investors who buy bonds from countries in difficulty . Rehn then addressed the issue of the banking system.
"The current crisis - he underlined - is a serious combination of public debt and weakness in the financial sector: we cannot solve one without the other". So we need to "intensify the bank recapitalization processes, establishing a common line within the EU".
