Poorer EU Members May Block ESM

Bulgaria in EU | March 16, 2011, Wednesday // 12:38|  views

Six EU members have opposed the the European Stability Mechanism, the permanent fund that is supposed to replace the European Financial Stability Facility in 2013.

Bulgaria, Latvia, Lithuania, the Czech Republic, as well as Euro zone members Estonia and Slovakia state that basing the capital set-up of the ESM on the European Central Bank funding structure would be unfair, according to the Romanian Ziare news agency

The ECB key takes into account 50 percent from the weighted average of a country's GDP to EU GDP and 50 percent from the share of its population to the whole Union's, leaving countries with lower GDP per capita pay relatively more as a proportion of it.

The ESM is to have a EUR 500 B effective lending capacity and will be designed to safeguard financial stability in the Euro area and prevent the onset of Greek an Irish scenarios.

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Tags: European Financial Stability Facility, European Stability Mechanism, GDP, European Central Bank

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