EFSF to boost firepower after Slovakia deal

 

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The Independent Online

The European Financial Stability Facility gave a strong indication yesterday that plans are afoot to leverage its €440bn (£383bn) in lending capacity. Christophe Frankel, the chief financial officer of the Luxembourg-based fund, said: "Any decision to use EFSF's capacity more efficiently will not lead to an increase in guarantee commitments from the member states and there will therefore be no consequence on the EFSF's triple A credit rating."

The EFSF has been urged to boost its firepower by using its €440bn in funding guarantees from the 17 eurozone member states as collateral for further borrowing in order to send a decisive signal to jittery financial markets.

Klaus Regling, the chief executive of the EFSF, also said in a statement that the fund stands ready to put its new powers – which include the recapitalisation of European banks – into effect. The statement came after Slovakia became the final eurozone member state to ratify the extension of the EFSF's powers. The government of the Prime Minister, Iveta Radicova, fell on Tuesday after her junior coalition partner abstained in a parliamentary vote on the extension of the fund's powers, causing the legislation to fail. A second vote was successful yesterday thanks to the backing of the opposition Smer party, which voted for the bill in exchange for an agreement from Ms Radicova to hold fresh elections.

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