ECB would support euro zone combining firewalls-Asmussen
Tuesday, 21 February 2012 | 00:00
The European Central Bank would support the euro zone boosting its firewall by combining what remains in its temporary bailout facility with its permanent fund, ECB board member Joerg Asmussen was cited as saying by a German business daily.
Other top policymakers, such as Eurogroup President Jean-Claude Juncker, have already called for the currency bloc to combine what remains in the European Financial Stability Facility with the 500 billion euros ($658.15 billion) earmarked for the European Stability Mechanism to create a super-fund.
"In this way, we could reach 750 billion euros," Asmussen told the Financial Times Deutschland, noting the ECB would support this approach.
But government sources have told Reuters that Germany - Europe's largest economy and main paymaster - would only boost the bloc's firewall under the threat of a disaster.
Meanwhile, euro zone finance ministers have agreed to reassess the adequacy of the euro zone rescue funds in March.
Asmussen echoed the pessimism of Mexico's Finance Minister Jose Antonio Meade about the likelihood of the Group of 20 finance ministers reaching a deal in Mexico City later this month to boost International Monetary Fund resources.
"Many non-European G20 states expect the Europeans to first build their own firewall and raise it, rather than other funds flowing into it again from outside Europe," Asmussen said.
"Maybe we can decide on additional IMF funds at the IMF spring meeting in April," he added.
Countries such as the United States and Canada have insisted that no promises can be made on extra funding for the IMF until Europe announces new steps.
The fund estimates it needs $600 billion more to limit the fallout from the crisis.
Asmussen also criticized emerging economies for hoarding foreign reserves.
He said that the world was moving toward a multipolar currency system, with the dollar remaining the most important currency for transactions, followed by the euro in the medium term, and, in a timeframe up to 2030, the Chinese currency.
But he added that the renminbi, more commonly known as the yuan, could only play a greater role if China made its currency more flexible.
"This would require a reform of the Chinese banking sector and financial system," he said.
U.S. and other international financial authorities have long urged China to let its renminbi float more freely on foreign exchange markets as critics argue China has gained an unfair edge in global markets by keeping its currency artificially low to boost exports.
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