Bundesbank Wants More Control on European Rescue Packages

The euro zone’s bailout fund, governed by its finance ministers, should set the terms of future rescue packages and enforce fiscal rules, taking over some of the European Commission’s tasks, Germany’s central bank said on Monday.

Germany has been looking to exert greater control over money spent to help Europe’s weaker economies – a sensitive theme in a country that is the biggest contributor to the budget of the fund, known as the European Stability Mechanism.

The Bundesbank would like the ESM to assess the economic prospects of countries applying for a bailout and identify their financial needs.

“The program implementation could be monitored also by the ESM in future,” the Bundesbank said in its July report.

The ESM was created in 2012 as a ‘firewall’ fund to lend money to countries in distress, provided they accepted certain conditions. It has made loans to over-indebted countries such as Greece.

But the terms of the bailouts have so far been negotiated by a troika comprising the Commission, the European Central Bank and the International Monetary Fund, which would also monitor the country’s progress.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency
trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza