It seems that even the Cancellerie is beginning to soften. According to the German newspaper, Sueddeutsche Zeitung, Prime Minister Angela Merkel is reportedly beginning to consider the possibility of strengthening the ESM, the Eurozone's permanent bailout fund. The ESM currently has a value of 500 billion euros and it seems that Merkel is willing to increase it up to 750 billion, according to sources close to the federal government reported by the newspaper. “We will not be able to resist this pressure for long,” Merkel allegedly said.
The pressure to which the German chancellor would have referred is that of numerous countries, also outside the euro area from the United States to China, which they want a stronger bailout fund to act as a guarantee for Euroland.
Today the EU summit kicks off in Brussels in which the various hypotheses could be evaluated. One of the most plausible solutions excludes the creation of the ESM this summer and rather foresees the merger with the ESFS, the temporary bailout fund. Thus the two funds together, united in the permanent ESM, would have a total capital of 750 billion euros. In this case, Germany would be forced to pay an additional 22 billion euros in capital and provide guarantees for around 280 billion euros. And again according to Sueddeutsche Zeitung, in exchange Berlin would like an increase in the resources of the International Monetary Fund to 600 billion dollars. But the final decision will be known at the end of March.
This afternoon, immediately after the Eurogroup meeting and before the start of the work of the EU summit, the Italian premier Mario Monti should reunite with Merkel.
