German Finance Minister Wolfgang Schaeuble has implied that European governments may put together a permanent rescue fund which requires bondholders to share losses in sovereign bailouts.
He added that Germany may withdraw from demands that private creditors back rescues in payment for European treaty amendments which heighten limitations on budget oversight.
The EU’s attempts to speed the European Stability Mechanism process have been slowed as Germany and the Netherlands hesitate to drop their bondholder-loss provisions.
“Basically we agreed on the principle for the ESM already in June,” said Schaeuble. “If we now manage to move towards a stability union, we’ll see how one might possibly adjust the treaty.”
Next week there “may be discussions in Brussels” on the topic. According to Scaeuble, finance leaders will aim to discover details of the EU leaders’ agreement last month, as well as to recapitalize banks and to strengthen the European Financial Stability Facility.”