MINISTER FOR Finance Michael Noonan said Europe’s triple-A countries want to reinforce budgetary oversight in the euro zone before any discussion on a wider mandate for the European Central Bank.
As the debt crisis escalates, both the ECB and Germany are resisting pressure for the bank to assume the mantle of lender of last resort in the euro zone.
Mr Noonan dismissed headlines suggesting that EU leaders now face a 10-day deadline to “save the euro” at a summit next week. “That’s drama rather than reality,” he said.
Leaving a meeting of EU finance ministers in Brussels, Mr Noonan said there was an “evolving situation” in relation to the role of the ECB. “The triple-A countries are putting their emphasis on better governance controls before they would consider any other options.”
Without disclosing details of the ministers’ engagement with ECB chief Mario Draghi, Mr Noonan said Mr Draghi was a man of “fewer words” than his predecessor Jean-Claude Trichet.
“Obviously the issue of central bank involvement is something that’s discussed on the margins of the conference but there’s no proposal from the ECB at this stage.”
Mr Noonan was speaking after euro zone ministers resolved to provide bilateral loans to the International Monetary Fund to enable it to intensify its response to the debt crisis. The aim was to supplement efforts to boost the European Financial Stability Facility bailout fund, which has fallen short of expectations.
“The IMF, I understand, stands ready to provide funding as well, provided the member states are willing to increase contributions in one way or another,” Mr Noonan said.
“Seemingly the preliminary reports are that yes, there is a willingness among member states and that, as I say, the IMF stands ready to be helpful if required in terms of building a higher or a bigger firewall.” Asked why euro zone countries would not simply increase their contributions to the EFSF, Mr Noonan said the IMF route would probably provide better leveraging as European and global countries would be involved.
“It’s a question of how much leveraging you can achieve. And by doing it through the IMF as well the EFSF the view is that a stronger or higher firewall, depending on what terms you use, would be possible.”
On whether the ECB might provide loans to the IMF as part of this effort, Mr Noonan said such topics did not feature in the debate.
“In one way or another, the members of the IMF would make a larger contribution so that the pool of funds available would be increased so that they could support the euro zone both in the interests of the euro zone and in the interests of the international economy.”
Mr Noonan said he had no current plan to ask the EFSF to intervene on secondary bond markets to buy Irish debt.
“We’ll see the full details of that as time goes by. That proposal is there in principle but there are conditions attached and we’d need to measure whether it would play to our advantage or not,” he said.
“Obviously, it’s something that you’d be absolutely pragmatic about but we’ve no plan in that direction at present.”
On the suggestion that euro countries might pool their guarantees over the banking system, he said there were “lots of mentions” but no specific proposal. Michael