Europe News

EU parliament backs treaty change to allow permanent euro fund

Mar 23, 2011, 16:07 GMT

Brussels - The European Parliament on Wednesday backed proposals to amend European Union treaties to create a permanent eurozone rescue fund.

Last year, EU states circumvented a 'no bailout' clause in the bloc's rulebook by setting up a eurozone fund that was only temporary. After it was decided to make it permanent, Germany insisted that a treaty change was necessary to back the reform.

The European Stability Mechanism (ESM) is due to be launched in mid-2013. EU deputies said they were backing the treaty change after receiving assurances that the European Commission, rather than EU states, would play 'a central role' in running the ESM.

Parliament's vote comes on the eve of a two-day EU summit which is expected to formally adopt the treaty change and funding decisions for the ESM, which is set to have a 500-billion-euro (705-billion-dollar) loan capacity.

The EU treaty change is then expected to be ratified by the bloc's 27 national parliaments before 2013.

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