Tuesday, October 9, 2012

Eurozone rescue fund launched

The eurozone's new permanent fund to bail out struggling economies and banks has been formally launched at a meeting of finance ministers in Luxembourg. The European Stability Mechanism (ESM) will have a full lending capacity of 500bn euros (£400bn; $650bn) by 2014.  It will initially run alongside, and then eventually replace, the European Financial Stability Facility (EFSF).

Europe's largest economy, Germany, will make the biggest contribution to the fund, about 27% of its total. The ESM, which is a new European Union agency, will be chaired by Jean-Claude Juncker, the Prime Minister of Luxembourg and chair of the Eurogroup. The launch of the ESM "marks an historic milestone in shaping the future of monetary union", Mr Juncker said after the inaugural meeting of the Eurogroup of finance ministers that makes up the fund's board.

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