ECB official concerned about fate of bailout fund in Germany
(FRANKFURT) - A senior European Central Bank official expressed concern on Wednesday that Germany's top court could derail the eurozone's new bailout fund, the European Stability Mechanism.
In remarks to the weekly magazine Stern made available ahead of publication on Thursday, ECB executive board member Joerg Asmussen said the fate of the 500-billion-euro ($613-billion) ESM hinged on Germany's Constitutional Court.
The fund needs Germany's green light to come into being. Originally set to come into force on July 1, the launch has already been substantially delayed.
It will now have to wait until at least September 12, when the court will rule whether the German president can sign the ESM into law.
In the interview, Asmussen said he did not wish to tell the court how to do its job, but that the fund was a "very important anti-crisis tool" for the 17 countries that share the euro.
A negative ruling would mean that "the ESM would fail in its proposed form," Asmussen said.
So far, the court has never vetoed previous anti-crisis measures, but it has ruled that the German parliament ought to have a greater say.
Europe, Asmussen stressed, was "at a crossroads".
"There is a perceived division between North and South that we haven't seen in 10-15 years," the ECB executive board member said.
"We have to overcome this very quickly."
Europe faced two choices: greater political integration and surrender of some sovereignty or growing further apart, Asmussen argued.
"These are the only two possibilities. We can't afford ongoing instability," he said.
Asmussen also urged Germany, which is calling on its fellow member states to implement often painful structural reforms, to press ahead with its own reform process.
Immigrants had far too little access to the labour market and the taxation system was not particularly modern, he suggested."
"We must not rest on our laurels," said Asmussen, who is German.
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