|Fine Gael leader, Enda Kenny, with German Chancellor Angela Merkel, at the ruling Christian Democratic Union party headquarters, Berlin, Feb 14, 2011.
Eurogroup finance ministers on
Monday agreed on a bigger bailout fund, which will replace the current one in
2013. Meanwhile, the head of the new European Banking Authority said EU banks
will be subject to a "single rulebook."
Jean-Claude Juncker, the
Luxembourg prime minister and head of the Eurogroup of 17 Eurozone countries, said
after Monday's meeting in Brussels that while the total of €500bn
available to the current European Financial Stability Facility (EFSF)
bailout fund, will also apply to the permanent European Stability
Mechanism (ESM) from 2013, the new fund will be able to lend all the €500bn
facility compared with the current ceiling of €250bn, because of
requirement to have a triple A credit rating.
The International Monetary Fund
(IMF) will contribute an additional €250bn.
“I do think this will be enough,” Juncker said.
A Franco-German “pact for
competitiveness” is being pushed by Angela Merkel, the German chancellor,
and Nicolas Sarkozy, the French president, as part of the package of Eurozone
governance reforms to be agreed in March.
EU Economic and Monetary Affairs
commissioner, Olli Rehn, said on Monday that the EU-IMF bailout that was
approved last November, will not be opened for renegotiation by the new Irish
In Berlin, Fine Gael leader, Enda Kenny, told Chancellor Merkel that Ireland's
12.5% corporation tax rate cannot be changed but German media has quoted other
politicians as saying the issue is still on the table.
In answer to questions on the position of the next Irish government, Rehn told
reporters that flexibility was not in prospect immediately but he did not rule
out a review in future years.
“I’m of course following the Irish debate closely and I’m aware that in
democratic politics we have freedom of speech and freedom of positions. At the
same time, it is clear that the EU has signed the Memorandum of Understanding
with the State, with the Republic of Ireland and we expect continuity and
respect of the memorandum,” he said.
“It is essential to respect the plan, respect the memorandum and especially
for 2011 the decisions are very much framed by the memorandum but concerning
the outer years there is more room of manoeuvre.”
Rehn also said that the pricing of the loans was under review in the light of
concern about “the real issue of debt sustainability and its relation to
The composite interest rate of 5.8% on the Irish bailout is likely to be cut.
Meanwhile, Andrea Enria, the head of
the new European Banking
Authority, says in an interview with the Financial Times,
published today, that the EBA would need to use its new powers - -
enshrined in a “single rule book” - -to take a stronger line.
As head of the EBA’s
predecessor body, Enria said he tried 5 years ago to get the national regulators
to boost banks’ liquid assets and harmonise their rules on bank capital - -
policies that could have saved European banks from much of the fallout from the
His immediate priority is that the
current round of bank tests have credibility, in contrast with last year's when
Ireland's Allied Irish Banks, passed the stress test in July and by December had
to be effectively nationalised.