Finland seeks collateral from troubled eurozone countries

(HELSINKI) - Finnish Finance Minister Jutta Urpilainen called Thursday for ailing eurozone countries to put up earmarked tax revenues or state property as collateral in exchange for rescue packages.

"By giving the loans appropriate collateral and taking them away from the sphere of domestic legislation, the bonds of troubled eurozone countries would become more attractive to investors," Urpilainen wrote on her blog Thursday.

This would "solve one basic problem surrounding the current crisis," she said as EU heads of state and government were meeting for a euro crisis summit in Brussels.

Urpilainen compared the eurozone's debt-stricken countries to Finland's own experience in the early 1990s, when it plunged into a deep recession and its ability to pay back loans was widely questioned.

"When Finland's ability to service loans was questioned, confidence was increased by the cashflow generated from state-subsidised loans issued by the Finnish government's housing fund. Hence, a triple-A rating was gained and the loans became a sought-after investment."

Finnish Prime Minister Jyrki Katainen told a parliamentary hearing Wednesday that Helsinki would demand collateral from Cyprus if that country's bailout was taken from the EFSF, a temporary mechanism created to help eurozone states hit by the debt crisis.

"As with previous rescue packages, Finland will request collateral from Cyprus if the funds are drawn from the" European Financial Stability Facility, spokesman Kare Halonen told AFP.

Cyprus announced on Monday that it had requested assistance from its eurozone partners, becoming the fifth out of the 17 countries that share the euro to seek a rescue.

Finland, one of only a few EU countries to enjoy a triple-A credit rating, has been at the forefront to demand fiscal responsibility and strict conditions on rescue packages for ailing eurozone countries.

Last year, Finland created a significant stumbling block for the eurozone's second rescue package for Greece, only agreeing to take part after striking a bilateral collateral deal with Athens in October 2011.