The European rescue fund could use different interest rates in the debt it raises to help boost its effective lending capacity without having to increase the headline sum, German Economy Minister Rainer Bruederle said.
"One could for instance work with different interest rates within the (European Financial Stability Facility) EFSF," Bruederle was quoted as saying in an interview with Die Welt am Sonntag newspaper seen on Saturday ahead of publication. "That means the individual credit tranches that the EFSF borrows and passes on to the countries it helps could be raised at different interest rate levels," Bruederle told the paper.
"Then one wouldn't have to change the volume." Europe is discussing ways to beef up the rescue fund EFSF, which has a headline value of 440 billion euros but an effective lending capacity estimated at just 225 billion euros because of the need to secure a triple-A credit rating.
The challenge is to boost it without raising the headline sum, which would be difficult to sell politically to Germany's parliament and public in particular. On Friday, Germany said it would consider the option of getting eurozone countries who do not have an 'AAA' rating to help boost the capacity of the EFSF by injecting cash. Bruederle also said Europe's fiscal policy should be aligned more closely but added he did not favour a European economic government.
"We don't want the same tax rates in each euro country. But we do want that the advantages in competitiveness in one country are not paid by the tax payer in another," he said. "A European debt brake in the national constitutions would also be good," Bruederle added. The debt brake law, which came into effect at the beginning of 2011, stipulates that Germany has to cut its structural deficit to 0.35 percent of gross domestic product by 2016.