Germany against boosting EU rescue fund

| December 6, 2010 | 0 Comments
’Germany

A meeting of euro zone finance ministers is taking place today to discuss boosting the EU rescue fund in light of the debt crisis that is currently eating its way into the nation.

The recent Irish bailout has done little to allay fears and speculation has been mounting that other weaker euro zone economies may need financial aid.

As a result, Dominique Strauss-Kahn, chief of the International Monetary Fund (IMF) called on ministers to boost the €750 billion (£636 billion) bailout fund, known as the European Financial Stability Facility.

However, German Chancellor Angela Merkel was against the suggestion and said there is no need to increase the size of the facility.

Ireland’s €85 billion rescue package has done little to alleviate the debt crisis and there have been fears that the contagion would spread to Portugal, Belgium, Italy and Spain.

There have also been fears for the euro and some economists have been questioning its future.

The currency continues to slide over concerns about the debt crisis and many fear that the 16-nation euro currency will fail.

Spain’s effect on the euro is becoming apparent and while Spain has been deemed “too big to fail”, a bailout for the country would be devastating and could bring the euro down.

However, over the weekend, Spain’s finance minister insisted that the country will not follow Greece and Ireland and seek a bailout.

In a newspaper interview, Elena Salgado said: “Our fiscal adjustment is on track… we have done all the things that we had to do with our financial sector.”

She added that Spain is “absolutely not” seeking a rescue.

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