Schäuble preparing EU bailout fund reform proposal

German Finance Minister Wolfgang Schäuble waits for the start of a hearing by the Panama Papers Committee of the European Parliament. Brussels, 11 July. [Olivier Hoslet/EPA]

German Finance Minister Wolfgang Schäuble is working on a proposal that would allow southern eurozone countries to tap into the single currency bloc’s bailout fund to boost investments during recessions, a newspaper reported on Wednesday (23 August).

If the unsourced report in the mass-selling German daily Bild is confirmed, the plan would mark a major change of policy for Schäuble who had until recently always opposed transfers from richer eurozone countries to poorer members like Greece.

The finance ministry was not immediately available to comment on the report.

Germany is the biggest contributor to the European Stability Mechanism, the eurozone’s bailout fund.

Bild said Schäuble intended to make the proposal after Germany’s 24 September election, which his conservatives, led by Chancellor Angela Merkel, are expected to win.

In exchange for more flexible access to the ESM, Schäuble wants the fund to have more say over national debt and budgets.

Bild added that the proposal was a goodwill gesture toward French President Emmanuel Macron who has vowed to work with Merkel on a roadmap for closer eurozone integration.

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Schäuble said earlier this year that he shared Macron’s view that financial transfers from richer to poorer states are necessary within the eurozone.

A joint eurozone budget and a common finance minister are among ideas for deeper European Union integration around the single currency after Britain leaves the EU in 2019. Completing a banking union has also been proposed.

Schäuble is loathed in many southern eurozone countries and especially in Greece, for insisting on tough austerity measures in exchange for bailout funds during the bloc’s debt crisis that started seven years ago.

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