The FINANCIAL -- German Finance
Minister Wolfgang Schaeuble on Friday sought to allay fears that
Europe's top economy would have to pick up the tab if other countries
could not pay their share of the eurozone's rescue fund.
Speaking to Deutschlandfunk public radio, Schaeuble said that if a member country could not stump up its proportion of the cash for the massive 500-billion-euro firewall known as the ESM, then Germany -- already Europe's effective paymaster -- would not be left to pay the difference.
"If a member cannot pay in, then the total sum of the ESM will be reduced. The liabilities of the other countries will not be increased," the finance minister insisted, pointing out that that had been expressly written into the ESM Treaty.
Even if one country after the other could not pay, for whatever reason, Germany would still not have to foot the bill, the minister insisted.
"If nobody pays into the fund then there'll be nothing there. There'll be no rescue fund," he said.
Earlier this week, Germany's Constitutional Court gave its green light for President Joachim Gauck to sign the European Stability Mechanism, a permanent rescue facility, into law.
Many Germans are deeply unhappy about this because they fear that Germany will eventually end up paying for fellow eurozone members that fail to get their finances in order.
Various groups from across the political spectrum had therefore asked the court to block the ESM. But the Constitutional Court rejected their appeals.
Those same opponents were also similarly critical of the recent decision by the European Central Bank to embark upon a new programme of buying up the sovereign of debt-wracked countries.
As EUbusiness reported, the critics argue that such a move contravenes the ECB's own statutes, saying it is tantamount to the ECB simply switching on the printing press to print the banknotes to pay for a country's debts.
Schaeuble insisted that was not the case.
"I have confidence in the ECB," he said in the radio interview.
Critics are worried that the ECB has not set any limits to such bond purchases.
"If the ECB were to name an actual figure, it would be simply an open invitation to speculators to speculate against that figure," Schaeuble argued.
"That's why the bank says it won't name a limit. But if it were to really buy unlimited amounts of bonds, then we would indeed be on the slippery slope. And we would never accept that because that would contravene the ECB's mandate," Schaeuble argued.
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