Will European Monetary Fund come into existence? by Zuzana Zelenakova

Continuing financial crisis in Greece prompted plans for the creation of a European Monetary Fund over the weekend. Such a loan-providing fund would strengthen relations within eurozone consisting of sixteen members. According to the EU´s economic and monetary affairs commissioner Olli Rehn "The commission is ready to propose a European instrument like this that would have the support of eurozone members." Currently, the EU is capable of providing loans to non-eurozone countries that are in need, but not the sixteen countries within the zone. Plans for the creation of such an institution were first introduced by German finance minister Wolfgang Schauble, who said that! the European Monetary Fund is to have authority equal to the Washington-based International Monetary Fund. "We're not planning an institution that would compete with the IMF, but for the internal stability of the eurozone, we need an institution that has the experience and power of the IMF," he explained. Greece that is currently falling to its knees under the weight of €300 billion national debt has been an impulse behind the idea for establishing the institution, however, it is unlikely that the European Monetary Fund will be ready in time to help Greece. Greek Prime Minister George Papandreou has already gained support from France, although the details are not known yet. "France is by the side of Greece in the most resolute fashion," said French President Nicolas Sarkozy. "The euro is our currency. It implies solidarity. There can be no doubt on the expression of this solidarity." In Germany, however, Mr. Papandreou did not get what he hoped for. Chancellor Angela! Merkel did not introduce a concrete proposal that Greece need! s for pr eventing investors from being discouraged by a possibility of default. Mr. Papandreou has also presented the issue to the US President Barrack Obama. "We have found a positive response from President Obama which means this issue will be on the agenda in the next G20 meeting," said Greek Prime Minister after the meeting in White House.

related story (sgx16719): http://www.france24.com/en/20100309-european-commission-euro...

by Zuzana Zelenakova for SigEx Ventures (http://sigexventures.com)

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