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Euro zone finance ministers fail again to name new bailout fund head

Published 07/11/2022, 01:48 PM
Updated 07/11/2022, 01:56 PM
© Reuters. FILE PHOTO: European Union flags flutter outside the EU Commission headquarters in Brussels, Belgium June 17, 2022. REUTERS/Yves Herman

BRUSSELS (Reuters) - After several months of attempts, euro zone finance ministers failed again on Monday to choose a new head of the bloc's bailout fund, EU officials said.

Ministers need to agree on the successor of Klaus Regling who will retire in October after having steered the European Stability Mechanism (ESM) since its creation in 2012 in the midst of the euro zone debt crisis.

One of the three candidates, Italy's Marco Buti, quit before the poll on Monday, but neither of the other two candidates got enough votes to be appointed.

Luxembourg's former finance minister Pierre Gramegna and Portugal's former finance minister Joao Leao remain in the race.

The possible decision has now been postponed to a meeting in September, an official said. Ministers had already failed to reach a compromise in June.

Gramegna is a career diplomat who served as Luxembourg's finance minister for nearly a decade before he quit earlier this year. He ran twice for the post of the head of the powerful Eurogroup of euro zone finance ministers, but lost on both occasions to other candidates.

Leao was finance minister for about two years until last March when he was replaced after Portugal's general elections.

The ESM is a European lender of last resort to governments, which issues bonds guaranteed by all 19 euro zone countries. It has a lending capacity of 500 billion euros.

© Reuters. FILE PHOTO: European Union flags flutter outside the EU Commission headquarters in Brussels, Belgium June 17, 2022. REUTERS/Yves Herman

The ESM can also extend precautionary credit lines to governments before they lose access to markets, directly recapitalise banks or lend to governments for that purpose and buy sovereign debt on the primary and secondary markets.

During the pandemic, the ESM also offered to lend to euro zone governments for healthcare, cure and prevention related costs, but no country used that option.

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