With spring, even the heart of icy Germany melts away. The Financial Times confirmed the advances of other German newspapers announcing that the German chancellor Angela Merkel is ready to increase the funds available to the rescue mechanism of the countries of the euro area (ESM), which is expected to come into force in June. "Germany is about to bow to international pressure", reads the FT, "and is ready to allow a temporary strengthening of the bailout fund, to curb market pressure". The strengthening of the ESM firewall to which Merkel would be willing to cede would only take place on a temporary basis through the capital increase in the transitional rescue fund (EFSF).
The measure is considered by many experts and heads of government to be essential to prevent the crisis from spreading from the periphery to the center of Euroland. Angela Merkel and her Finance Minister Wolfgang Schaeuble "will no longer oppose the wish of their partners and the International Monetary Fund (IMF) to add the funds of the EFSF, endowed with 440 billion euros to those of the Fund which the ESM will succeed him on a permanent basis”, reads the English newspaper.
As reported by the German newspaper Der Spiegel, they would be two hypotheses through which the ESM could be strengthened: by channeling the 200 billion euros committed by the EFSF for aid to Greece, Ireland and Portugal into the ESM, leading to almost 700 billion the total amount of the European lifesaver; or the temporary fund and the stability mechanism could operate in parallel and the crisis intervention capacity would be enlarged a 940 billion euros in total.
Even Finland, which has always been the most intransigent in cases of European solidarity, seems on the verge of giving in. Finnish premier, Jyirki Katainen, noted the need to find a "good compromise": the strengthening of the ESM "must be high enough, but not too much (…) otherwise it would destroy the credibility of the eurozone economy".
The premiers of the Eurozone will discuss it in the Ecofin scheduled for 30 and 31 March in Copenhagen.
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