Euro zone in no hurry to increase rescue facility

| January 18, 2011 | 0 Comments
Euro zone in no hurry to increase rescue facility

Following the two-day meeting of European finance ministers in Brussels, it has emerged that Governments are in no hurry to increase the European Financial Stability Facility (EFSF) - otherwise known as the rescue fund.

Greece and Ireland have received emergency bailouts from the fund and there has been speculation that weaker euro zone nations will need to tap the facility for funds.

Portugal and Spain are both under scrutiny and face pressure to seek a bailout in order to prevent the euro zone debt crisis spreading further.

Borrowing costs in both countries have risen recently – mimicking what happened in Greece and Ireland – just before they were forced to seek emergency aid.

However, both countries continue to fiercely deny that an EU bailout is required.

Despite the outcome of the meeting, the euro rose sharply, gaining more than a cent against the dollar this morning to $1.34.

In the meantime, euro finance ministers have been discussing tougher stress tests for European banks - which are to be carried out in May. The new ones are expected to include a liquidity test.

Stress tests carried out last July failed to reveal the weakness among banks in Ireland.

Commenting, EU Internal Market Commissioner Michel Barnier, said: “We need to learn all the lessons of the first two rounds of stress tests and we need to make these more robust and more credible.”

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