Germany may pay full ESM contribution in 2012: report

Sun Dec 18, 2011 5:25pm EST
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BERLIN (Reuters) - Germany's Finance Minister Wolfgang Schaeuble said the country may pay its full contribution to the euro zone's permanent rescue fund in 2012, a regional German paper wrote.

"It is clear that the sooner and the more paid-in capital the ESM (European Stability Mechanism) has, the more it gains trust on the financial markets," he was quoted as saying by the Rheinische Post Duesseldorf, in an interview to appear in Monday's print edition. "My priority is to create trust."

The Finance Ministry was unavailable to comment.

European leaders agreed in Brussels last week to accelerate the launch of the ESM by a year to mid-2012, as part of measures aimed at putting an end to a devastating debt crisis.

The ESM, which will replace the temporary EFSF bailout fund, will have an effective lending capacity of 500 billion euros ($651.9 billion) and total subscribed capital of 700 billion euros, of which 80 billion euros will be paid-in capital from euro zone countries.

EU leaders agreed earlier this year that the paid-in capital will be channeled into the fund over five years in five equal installments.

Germany's total contribution to the paid-in capital is set for 21.5 billion euros, paid in instalments of 4.3 billion euros. Earlier this year, it was reticent to pay up its contribution at a faster pace, due to concerns about sticking to its debt brake and consolidating its own budget.

Schaeuble was cited earlier this week by a newspaper as saying Germany would fund its contribution to the ESM with a supplementary budget.

A government source told Reuters earlier this week that Germany's first instalment could be much higher than previously planned "because people want the ESM to be able to act soon."   Continued...