Germany is the last country in the 17-member euro zone to complete ratification of the European Stability Mechanism (ESM), an important tool to stem the three-year debt crisis that has forced bailouts of Greece, Ireland and Portugal and now threatens big countries like Spain and Italy.
German ratification was held up for months by legal complaints against the ESM. The Constitutional Court finally gave the bailout fund the green light on September 12 but said the government must also meet certain conditions.
In line with that ruling, the declaration approved by Chancellor Angela Merkel’s centre-right cabinet stated that the German parliament would have veto rights over any increase in Berlin’s contribution to the 700 billion euro ESM.
Germany’s contribution is now capped at 190 billion euros.
“The declaration corresponds to the guidelines set out by the Constitutional Court,” Merkel’s spokesman Steffen Seibert told a regular news briefing.
The lower house of parliament, the Bundestag, will debate the declaration later on Wednesday but no vote is required.
The Bundestag and the upper house Bundesrat approved the ESM in June with large majorities.
President Joachim Gauck signed the ESM legislation on September 13, a day after the Constitutional Court ruling, but said formal ratification would only be complete when the government had met the court’s conditions.
via Reuters
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Alfonso Esparza
trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
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