EU debates emergency cash fund

Finance ministers discuss creating "mini-IMF" to bail out cash-strapped member nations.

    Barnier has underscored the responsibilities of central banks in tackling the financial crisis [EPA]

    Bailout plan

    Elena Salgado, the Spanish finance minister, said the ministers were determined
    to safeguard the currency used by 16 of the EU's 27 member states.

    Under the plan, the EU will make between 60 and 70bn euros available to any euro-zone country that suffers a debt crisis. 

    in depth
      Pictures: Greece protests
      Q&A: Greek economic crisis
      The Greeks are angry
      Sacrifice and suffocation for Greece
      The humiliation of Greece
      People & Power: The bankrupt state
      Inside Story: A financial bailout for Greece?
      Counting the Cost: Greece is the word
      Greek protests turn deadly
      Greece hit by anti-austerity rally
      Wake-up call for Greek economy
      Fears grow over debt crisis

    Current EU rules ban bailouts for countries that use the Euro, but the European Commision is believed to be considering extending an existing clause in the Lisbon Treaty which allows financial aid to non-eurozone countries.

    An EU diplomat on Sunday told the AFP news agency that a type of "bank" would be set up with unused funds from the bloc's budget, which would then serve as "base capital on which to borrow 60-70bn euros (up to $90bn) on the bond market".

    Guarantees offered by member states would help keep the interest rates low, the diplomat said.

    Some EU countries want the measures agreed before financial markets open on Monday to prevent the continued spread of fears over the reliability of the euro.

    But not all EU countries use the Euro and those with their own currencies will not support the creation of the so-called "stabilisation fund" because they will never be able to draw from it.

    The UK, facing its own debt problems, appeared to reject the plan out of hand. Speaking before the meeting, Alistair Darling, the UK finance minister, said that there were limits to help that London can be expected to provide to the 16 eurozone countries.

    "We need to show again today that by acting together we can stabilise the situation, we do not want to jeopardise the recovery that is slowly taking place. And we will play our part in that," he told reporters. "But when it comes to supporting the euro, obviously that is for the eurozone countries."

    Bankers' meet

    Sunday's hastily arranged meeting of all 27 EU members is an indication of the seriousness with which the potential spread of the Greek crisis is being viewed.  

    Spain and Portugal are beginning to show the same signs of trouble that Greece first experienced three months ago.

    The meeting came as the world's central bankers gathered in the Swiss city of Basel.

    Michel Barnier, Europe's financial services commissioner, said "you can count on the central bank to play its part" in the plan.  

    The bankers were meant to discuss such issues as the end of special measures taken during the recent global financial crisis, as well as longer-term issues surrounding monetary system reforms.

    But their meetings may now turn into a crisis sitting as Greece's debt woes spread beyong its borders, pushing down Europe's single currency and world stocks sharply down.

    As the two meetings proceeded, Barack Obama, the US president, telephoned Nicholas Sarkozy, his French counterpart, to discuss the situation.

    "President Obama spoke with President Sarkozy as part of his ongoing engagement with European leaders about the economic situation there," a White House statement said. "They agreed on the importance of Europe taking resolute action to build confidence in the markets."

    Meanwhile, the IMF's executive board has approved a $38bn loan for Greece, the fund said in a statement.

    SOURCE: Agencies


    Death from above: Every Saudi coalition air raid on Yemen

    Death from above: Every Saudi coalition air raid on Yemen

    Since March 2015, Saudi Arabia and a coalition of Arab states have launched more than 19,278 air raids across Yemen.

    How Moscow lost Riyadh in 1938

    How Moscow lost Riyadh in 1938

    Russian-Saudi relations could be very different today, if Stalin hadn't killed the Soviet ambassador to Saudi Arabia.

    How different voting systems work around the world

    How different voting systems work around the world

    Nearly two billion voters in 52 countries around the world will head to the polls this year to elect their leaders.