Reuters: Regulatory News: Spain to seek unlimited firepower for euro zone bailout fund

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Spain to seek unlimited firepower for euro zone bailout fund Jun 12th 2013, 15:43 MADRID, June 12 | Wed Jun 12, 2013 11:43am EDT MADRID, June 12 (Reuters) - Spain will press its European peers next month to remove limits imposed on the fund set up to bail out struggling euro zone states, its foreign minister said on Wednesday. Spain and other states including France and Italy have already pushed to lift the 500-billion-euro limit set on the European Stability Mechanism (ESM), but Germany among others blocked the move. But with the vast majority of the euro zone mired in recession and anxious to retain the confidence of markets, Jose Manuel Garcia-Margallo said Spain would try again at a meeting of European foreign ministers he will host in Palma de Mallorca on July 19 and 20. "It is not possible to have a backstop that has a limited firepower, which needs unanimity (to be used) and which is so rigid," he told journalists at a joint press conference with his French counterpart Laurent Fabius. "By definition a backstop must have an unlimited firepower and capacity to act quickly, which is currently not the case." Garcia-Margallo's intervention coincided with a hearing in Germany's top court on whether the ESM - and more specifically the European Central Bank's bond buying scheme for which states seeking aid are eligible - violate German law. Both have been credited with helping prevent a possible break-up of the euro zone, and the as-yet untapped bond-buying programme with keeping debt costs manageable for Spain and other ailing euro zone states. Garcia-Margallo also said a good way to boost growth would be to move more quickly towards a full banking union in the euro zone and for the ECB to revise its rules on collateral to accept securitised loans to small- and medium-size companies. Link this Share this Digg this Email Reprints

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