UPDATE 1-Merkel wants more talks on ESM deal -sources

Published 03/22/2011, 02:44 PM
Updated 03/22/2011, 02:48 PM

* Merkel quoted saying ESM still needs discussion

* Berlin wants to discuss capital injection details -sources

* Finance ministers' agreement "not the final word"

(Adds quotes and background)

BERLIN, March 22 (Reuters) - German Chancellor Angela Merkel is pressing for further negotiations on an agreement struck by euro zone finance ministers on the structure of the euro zone's new bailout system, government sources said on Tuesday.

Merkel believes the direction of the agreement on the European Stability Mechanism -- the bailout scheme for members of the euro zone coming into effect from 2013 -- is right but details on capital injections should be changed.

"It's in the right direction but the path will have still have to be altered," one source quoted Merkel as saying.

Berlin wants to discuss both the timing and size of the capital injections into the ESM, the sources said, without giving further details.

Earlier on Tuesday, Foreign Minister Guido Westerwelle told members of parliament from the ruling coalition that details of the ESM agreed by European Union finance ministers earlier this week in Brussels would not be the final word on the matter ahead of a summit expected to finalise details at the end of the week.

Finance ministers had agreed the ESM, which will replace the existing European Financial Stability Facility, would have an effective lending capital of 500 billion euros and a subscribed capital structure of 700 billion euros to ensure its triple-A credit rating.

This total capital would consist of 80 billion euros in paid-in capital and 620 billion in callable capital and guarantees granted by euro zone member states.

Their agreement proposed half of the paid-in capital should be put up by July 2013 and the remaining 40 billion euros over the following three years. (Reporting by Andreas Rinke; writing by David Stamp and Stephen Brown; Editing by Hugh Lawson)

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