What’s that? Could it be the sound of Germany and France frantically rowing back as they realise that their plans for a son of EFSF were somewhat misjudged.
Looks that way.
Statement issued by the finance ministers of France, Germany, Italy, Spain and Britain at the Group of 20 meeting in South Korea on Friday (emphasis ours):
‘At its meeting on the 29 Oct 2010 the European Council discussed the future arrangements for ensuring economic and financial stability in the European Union.
‘Whatever the debate within the euro area about the future permanent crisis resolution mechanism and the potential private sector involvement in that mechanism we are clear that this does not apply to any outstanding debt and any programme under current instruments.
‘Any new mechanism would only come into effect after mid-2013 with no impact whatsoever on the current arrangements.
‘The EFSF is already established and it’s activation does not require private sector involvement. We note that the role of the private sector in the future mechanism could include a range of different possibilities such as a voluntary commitment of institutional investors to maintain exposures, a commitment of private lenders to roll over existing debts or the inclusion of collective action clauses on future bond emissions of euro area member states.’
Unsurprisingly periphery paper is rallying.
That seeping Irish confidence – 1% per day - FT Alphaville
Irish contagion hits wider eurozone – FT
Ireland has shown grit but must find a magic formula – Gillian Tett