German officials have drawn up plans for a new independent institution as part of fresh European moves aimed at shoring up financially troubled members of the 16-member eurozone and ensuring the euro's stability, the Finance Ministry said Thursday.
Setting out the details of the proposed fund, the daily Sueddeutsche Zeitung said the so-called European Stability and Growth Investment Fund would stand alongside the European Central Bank (ECB), which is the euro's chief guardian.
Plans for the new fund have been prepared by officials but have not been approved at the government level, the Finance Ministry said in a statement.
“The proposal set out in the article does not reflect the official position of either the Finance Ministry or federal government,” the ministry said.
In its statement, the ministry said that a recent meeting of European leaders “gave eurozone finance ministers the task of securing the stability of the euro region as a whole.”
The ministry said that finance ministers were also charged with “working on economic policy co-ordination and the cornerstones of the European Stability Mechanism (ESM).”
The framework for the ESM, which will replace a current temporary rescue mechanism for troubled eurozone economies in 2013, is to be finalized by March.
In its report, the Munich-based Sueddeutsche Zeitung said the proposed fund would provide loans against collateral in the form of gold reserves or equity in state-owned companies.
The proposed fund, which could operate along the lines of a European-style monetary fund, is expected to be raised at next year's eurozone finance ministers' meeting.
After a tumultuous year for the euro, triggered by Europe's debt crisis, eurozone governments are hoping the Christmas slowdown will help ease tensions surrounding the common currency and the region's financial markets.
Analysts say this should give officials breathing space to consider further measures for underpinning the euro before investors and dealers return to their desks in January for the start of the new trading year.
By then, the eurozone will also have been expanded, with the small Baltic state of Estonia becoming the currency bloc's 17th member on January 1.
But as a sign of the battle facing Europe as it attempts to map out a new strategy for dealing with the debt crisis, German Economics Minister Rainer Bruederle rebuffed fresh calls by France for eurozone members to step up coordination of their economic policies.
“A European economic government is not the right project,” said Bruederle.
Berlin's proposed fund would help to strengthen the ECB's independence as well as laying down tough rules for eurozone states forced to seek emergency aid, Sueddeutsche said.
It is envisioned that the fund, which would also be permitted to buy government bonds, would be supervised by an independent body comprised of national parliamentarians.
But the Finance Ministry's blueprint does not reflect the strong stance taken by Chancellor Angela Merkel on the need for private investors to bear part of the burden of bailing out financially strapped eurozone states.
The Sueddeutsche said the ministry plan does not call on private investors to be involved in any rescue operations.
The euro has taken investors on a roller-coaster ride this year as several eurozone states with high debt and deficit levels struggled to clean up their public finances.
After starting the year at about 1.46 dollars, the euro was heading into the Christmas holiday season Thursday trading near a three-year low of about 1.31 dollars.
By the middle of the year as the debt crisis surrounding Greece took hold, the euro had lost about 2 per cent of its value to trade at 1.19 dollars.
Eventually escalating borrowing costs forced Greece and Ireland to call for European Union-led bailouts.
In the meantime, Portuguese bonds have remained under pressure amid speculation that Lisbon will be the next eurozone state to tap Europe's financial rescue mechanism.
The German Finance Ministry plan would hold an amount of money to be made available for short-term emergencies, the Sueddeutsche reported. - Sapa-dpa