Ligi Says Trillion-Euro 'Firewall' Not Practicable
Minister of Finance Jürgen Ligi said he does not support increasing the size of the European Stabililty Mechanism (ESM) and does not think it reasonable to ask member states to build a high firewall as an additional safeguard.
OECD Secretary General Angel Gurria said in an annual survey released yesterday that the Eurozone needs at least a firewall of 1 trillion euros in rescue funds to restore the markets’ trust, give member countries time to implement reforms, speed up Europe’s economic growth and job creation and increase its competitiveness.
Ligi said the OECD was operating from the premise that the euro area mechanisms were not just considered critical for Europe but the whole world.
"In this issue, OECD is nevertheless a bystander, unlike the IMF, which has expressed the same desire for a high firewall. The IMF's contribution to resolving the debt crisis is direct, however, and takes place in sync with the Eurozone stability mechanisms," said Ligi.
"A firewall is not a solution, it is a crisis delimiter, buys additional time for solutions," he added. "The actual solution is in the hands of the parliaments and governments of the countries in the debt crisis and we await decisive action from them. We don't support increasing the size of the ESM, but it is realistic to think that an agreement will come about on the basis of the parallels between ESM and EFSF - for instance that due to the earlier launch of the ESM, loan capacity will increase to the sum of the ESM's 500 billion euros plus the EFSF's amount already issued [about 200 billion euros - ed]."