Monday, February 27, 2012

European Leaders Focus on Boosting $672 Billion Firewall After G-20 Rebuff

February 27, 2012

European leaders will shift their focus this week from a Greek bailout to the prospect of bolstering the region’s firewall against debt-crisis contagion as they ready for their latest summit.

After lawmakers in Germany and Finland vote on approving the second Greek rescue package today and Feb. 29, European Union heads of government will turn to their March 1-2 summit in Brussels. Leaders of the 17-member monetary union have said they’ll decide in March whether to lift a 500 billion-euro ($672 billion) limit to bailout funding.

As the European Central Bank prepares a second round of cash lending to help shore up the region’s banks, policy makers are focused on preventing a Greek collapse in order to take advantage of signs of an improved global economy.

The latest Greek bailout “gives the opportunity of euro- zone leaders to put a better, more organized and larger firewall in place,” William Rhodes, chief executive officer of William R. Rhodes Global Advisors and a former Citigroup Inc. executive, said in a Feb. 24 Bloomberg Radio interview.

Chancellor Angela Merkel’s government has resisted proposals to increase bailout funding by topping up the 500- billion-euro European Stability Mechanism, the permanent fund scheduled to be set up this year. Euro leaders are considering diverting funds from the temporary bailout mechanism, the European Financial Stability Facility, to increase the region’s resources in fighting the crisis.


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