ESM a fund of last resort, says ECB official
EUROPE'S rescue fund should only be used in last instance to help banks shore up their balance sheets, European Central Bank executive board member Joerg Asmussen has said.
A bank's owners and the market should be tapped first, and then states or national bank rescue funds, Mr Asmussen told German public broadcaster ARD.
The view goes against the wishes of the Government here which wants governments to be able to tap the fund retrospectively to help pay for previous bailouts.
"In the view of the ECB, the European Stability Mechanism (ESM), with the instruments that it has at its disposal, is the last port of call," Mr Asmussen said, adding that it was important to clarify how to shore up banks' balance sheets before the results of stress tests were released.
The ECB promised last month to put top eurozone banks through rigorous financial tests next year, staking its credibility on a review that aims to build confidence in the sector.
The central bank wants to unearth risks hidden in balance sheets before supervision comes under its roof as part of a banking union designed to avoid a repeat of the eurozone debt crisis.
To complete the roll-out of Europe's banking union, Mr Asmussen has called for a common resolution mechanism to be funded through a levy on banks. In the meantime, the ESM should provide a backstop. (Reuters)