"We want increase the resources of the International Monetary Fund and we are discussing this with Lagarde”. This was revealed from Brussels by the EU commissioner for economic affairs, Olli Rehn, as he entered the Ecofin council this morning. However, the Finn specifies that the support of all the IMF states will be needed. Confirmation of this intention comes from Jean-Claude Juncker: "We have agreed to quickly examine an increase in IMF resources through bilateral loans", says the president of the Eurogroup.
The goal is to ensure that the lending capacity of the IMF "can adequately correspond to the new firepower of the EFSF", the Eurozone State-saving Fund, which in turn will be strengthened, "and that it can cooperate with him even more closely". Rehn specifies that the bilateral loans to the IMF will be carried out by the states of the Eurozone. However, the contribution of European institutions is not foreseen.
Meanwhile, the ministers of the Eurogroup have practically concluded, during yesterday's meeting, the work for strengthening and broadening the scope of the EFSF. A timetable has also been established for the operational start-up of the two new instruments which, using financial leverage, should increase their 'firepower' to stop the contagion of the sovereign debt crisis. The formal decisions, however, will be taken by the heads of state and government during the summit on 8 and 9 December.
The Fund will provide collateral bills for government bonds of Eurozone countries under market attack, equal to 20 or 30% of their nominal value, so as to make sovereign debt bonds more attractive to investors . The guarantees, explained the executive director of the EFSF, Kaus Regling, "will be used above all in preventive intervention programmes, to reduce the cost of financing" the public debt of the countries concerned. The certificates, added Regling, will have the same duration and the same maturity as the securities to which they refer, but after the issue they can be untied from the securities themselves and traded separately on the market.
