Mon Jul 9th, 2012 at 03:04:35 AM EST
If this is true...
Ministers seek to untangle measures to help euro | Reuters
The ESM is due to start operating during the European summer, but at least for now, countries will need to provide guarantees in return for bank aid it gives, according to one euro zone official who is involved in preparing the Euro group.
That might help overcome German concerns about the ESM taking on this risk.
"There is some degree of mystification going on here ... in the broader public who think that under current rules the ESM could all of a sudden end up owning Bankia with the full risk of Bankia on the balance sheet of the ESM," he said, referring to the Spanish lender. "This is very much not the case."
The ESM is to be used to separate banks from sovereigns, except that it isn't?
Comment from Eurointelligence:
It is preposterous to argue that the fault lies with the broader public as he suggests. It was a deliberate misrepresentation of a policy by the European Council. If this official is right, it means that the ESM will not ever inject capital into the banks. Now it all makes sense why we don’t need a treaty change. If you don’t change the policy, you don’t need to change the treaty.
Slick? Duplicitous? FUBAR? Or is the official talking out of his official orifice?