New European bailout fund launched

LUXEMBOURG — The European Union’s financial affairs chief is “less pessimistic” about the future of the euro than he was earlier this year — but warned that the region was still a long way to go before the crisis over too much debt is solved.

LUXEMBOURG — The European Union’s financial affairs chief is “less pessimistic” about the future of the euro than he was earlier this year — but warned that the region was still a long way to go before the crisis over too much debt is solved.

Olli Rehn, the EU’s financial and monetary affairs commissioner, said the organization’s ability to react to the financial crisis in the 17 countries that use the euro has much improved compared with two years ago when the crisis began.

He also welcomed the official launch Monday of Europe’s new C500 billion ($647.9 billion) permanent bailout fund, the European Stability Mechanism.

“We have enough challenges in Europe,” Rehn said as he entered a meeting of finance ministers from the eurozone.

He added that while nobody was in a “ party mood,” he was “less pessimistic for the moment of the future prospects of the eurozone than, for instance, in the spring.”

In recent months, the EU has acquired significant new powers designed to help it resolve the current crisis and prevent new ones. These include the power to closely monitor national budgets and, where needed, demand changes in them. Also in the works is a central banking supervisor.

The new ESM is designed to reassure investors that the EU is better equipped to contain whatever crises erupt in the eurozone.

“Today is a good day for Europe,” said Jean-Claude Juncker, the prime minister of Luxembourg who is also chairman of the ESM’s board of governors.

The new fund will eventually have C500 billion at its disposal that it will use to buy up the bonds of countries whose borrowing costs are becoming unmanageable and also lend money to them if that’s not enough.

It will also lend money to countries that need to prop up failing banks, including handling Spain’s bank bailout. It is expected that the fund will eventually be able to lend money directly to banks.

The ESM will eventually replace a temporary bailout fund, known as the EFSF, but the two will overlap for the time being while the EFSF continues to handle the bailouts of Greece, Ireland and Portugal.

The eurozone finance ministers, meeting in Luxembourg, are expected Monday to assess developments rather than make major new decisions. The countries considered in the most tenuous financial condition now are Greece and Spain. International lenders are still preparing a report on Greece, and no new disbursement of bailout money will be approved until that report.

And, while some have speculated that Spain may need to request help in keeping the cost of its borrowing down, Spanish officials have made no request. In the absence of that, EU officials cannot act.

“Spain has to do its part and we will do everything about the public deficits and the economic reforms,” Spain’s finance minister, Luis de Guindos, said. “And on the other hand, we have to move forward on eliminating all the doubts there are on the future of the euro. That is fundamental. Spain will have difficulties recovering while there are doubts about the future of euro.”

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

With a ban on sit-in dining set to begin at noon Friday, Las Palmeras owner Andre Lemus is gearing up for more takeout and delivery business. He has also applied to set up and outdoor patio, where dining is allowed under new restrictions, and is selling his own branded seasonings, salsa, guacamole, tequila bags, margerita kits, and even aprons like the one he is wearing.
Photo by PAUL COWLEY/Advocate staff
Big interest in outdoor patios in Red Deer as sit-down dining banned again

City of Red Deer has tweaked its patio regulations to make it easier to get a permit

A sustainability audit for Westerner Park suggested 33 changes, including more city involvement. (Advocate file photo)
Westerner Park expands volunteer program

Westerner Park is recruiting volunteers to fill several positions. The new Volunteer… Continue reading

Black Press file photo
Appeal Court restores privileges for man who killed five at Calgary house party

EDMONTON — The Alberta Court of Appeal has restored some privileges for… Continue reading

A 19-day trial has been set for June 2022 for Chase Freed, who is accused of shooting to death a shopper outside the southside Red Deer Walmart and firing shots at two other people in the parking lot. (File photo by Advocate staff)
Man accused of killing a shopper outside Red Deer Walmart in December 2019 to go to trial in 2022

Chase Freed charged with second-degree murder and two counts of attempted murder

A health-care worker prepares a dose of the Pfizer-BioNTech COVID-19 vaccine at a clinic in Toronto on Thursday, January 7, 2021. THE CANADIAN PRESS/Nathan Denette
All adult Albertans to be offered first dose of vaccine by end of June: Premier

Alberta’s premier says the province will be “back to normal” when 72… Continue reading

Madelyn Boyko poses along with a number of the bath bombs she makes with her mom, Jessica Boyko. Madelyn says she enjoys making the bath bombs with her mom as it is a special time for just the two of them. (Photo Submitted)
5-year-old Sylvan Lake girl selling bath bombs in support of younger brother

Madelyn Boyko is selling bath bombs for CdLS research in honour of her younger brother

Minister of Public Safety and Emergency Preparedness Bill Blair responds to a question during question period in the House of Commons on Parliament Hill in Ottawa on December 11, 2020. THE CANADIAN PRESS/Patrick Doyle
New regulator to stop sexual exploitation of children online: public safety minister

OTTAWA — Public Safety Minister Bill Blair says the government will introduce… Continue reading

Gordon Greenwood Elementary Grade 7 students were assigned to write about climate change. The Langley Advance Times is pleased to present a selection of their writings. (Sasha/Special to the Langley Advance Times)
Canada’s greenhouse gas emissions increased slightly in 2019: report

OTTAWA — A new report shows Canada’s greenhouse gas emissions increased slightly… Continue reading

Conservative leader Erin O'Toole holds a press conference on Parliament Hill in Ottawa on Tuesday, April 6, 2020. Top Tory leaders of past and present will speak with supporters today about what a conservative economic recovery from COVID-19 could look like. THE CANADIAN PRESS/Sean Kilpatrick
O’Toole to vote against Conservative MP’s private bill on ‘sex-selective abortion’

OTTAWA — Conservative Leader Erin O’Toole says he will vote against a… Continue reading

Eugene Kwon of Gratia Bakery and Cafe says the business will be relying on take out orders and a small patio. (Neil Corbett/The News)
Small business struggling amid COVID-19 pandemic looks for aid in Liberals’ budget

OTTAWA — A group representing thousands of the country’s small businesses says… Continue reading

Ron Howard is photographed at the "Inferno" film premiere on Oct. 25, 2016 in Los Angeles. (Buckner/Rex Shutterstock/Zuma Press/TNS)
Brothers Ron and Clint Howard have memoir coming in October

NEW YORK — Filmmaker-actor Ron Howard and actor Clint Howard, brothers, former… Continue reading

FILE - In this Saturday, March 27, 2021 file photo, Buffalo Sabres’ Taylor Hall plays against the Boston Bruins during the second period of an NHL hockey game, in Boston. The Buffalo Sabres could trade 2018 MVP Hall, who signed for just this season and is a pending free agent. (AP Photo/Michael Dwyer, File)
Boston Bruins acquire Taylor Hall to kick off NHL trade deadline day

Trade deadline day in the NHL has started with the Boston Bruins… Continue reading

The Huawei logo displayed at the main office of Chinese tech giant Huawei in Warsaw, Poland, on Friday, Jan. 11, 2019. Poland’s Internal Security Agency has charged a Chinese manager at Huawei in Poland and one of its own former officers with espionage against Poland on behalf of China. (AP Photo/Czarek Sokolowski)
Huawei, HSBC agree on document deal for extradition case

HONG KONG — Chinese telecommunications equipment firm Huawei said Monday that it… Continue reading

Most Read