EUROZONE FINANCE MINISTERS are set to meet in Wroclaw, Poland today in an attempt to thrash out a solution to the growing debt crisis.
The ministers are expected to look for a way to implement the expansion of the European Financial Stability Facility, the central fund from which bailout loans are paid.
The expansion was agreed at a previous meeting on July 21 but has been held up by demands from Finland that Greece hand over collateral in exchange for bailout funds.
In a sign that the US is increasingly worried by the EU situation, Treasury Secretary Timothy Geithner will also attend the talks. Reuters reports that Geithner is likely to press for a leveraging of the EFSF – possibly using it as debt security for a larger loan, rather than loaning it directly – to expand its reach.
Meanwhile, five major banks yesterday announced plans to free up liquidity in the European banking system by pumping in cash, the Wall Street Journal reports. The five are the ECB, the US Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank.
Fears are growing that debt crises in Greece and other countries could cause severe problems even for strong economies within the Eurozone.Bloomberg reports that Steve Barrow, a currency researcher at Standard Bank in London has warned investors that the EU’s problem is system-wide, and not confined to Greece.
There has been speculation that Germany could look for an update to the Lisbon Treaty to allow for a new bailout mechanism. However, the country’s finance minister Wolfgang Schäuble yesterday appeared to rule that out, telling Reuters: “It is completely clear that we must solve our problems on the basis of existing treaties. Treaty changes take time.”
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