Austrian Fin Min: Favors Allianz-Type Insurance Model For EFSF
October 19 2011 - 3:08AM
Dow Jones News
A few days before euro-zone members meet to try to finalize the
currency bloc's bailout fund, Austria's Finance Minister Maria
Fekter said late Tuesday that she supports a proposal by German
insurance giant Allianz SE (ALV.XE) to turn the European Financial
Stability Fund into a bond insurance program.
"This insurance model for example would create increased
volumes," said Fekter, in an embargoed speech, adding that it is
important that such models be intensely discussed at a technical
level and that solutions independent from tax payers' funds be
found.
Increasing the EFSF's lending capacity beyond EUR440 billion
using funds provided by national governments seem unlikely, said
Fekter.
"I can't imagine increases to the EFSF beyond that. I can't at
all imagine that parliaments will ratify in the dimensions that are
sometimes mentioned in the media," said Fekter.
Under the Allianz proposal, the EFSF would be turned into a bond
insurer. Instead of a current lending capacity of EUR440 billion,
as an insurer the facility could cover more than EUR3 trillion in
bonds, Allianz said last week.
Fekter also said the current package on private sector
involvement as agreed upon by the heads of government in June
should be changed. While she said Austria's position is that any
private sector involvement should be voluntary, "It is Austria's
position that the private sector should be required to pay a bit
more."
She said the current private sector involvement model, which she
describes as a "make a wish" package developed by the banks, has
tax payers guaranteeing 100% of the capital.
-By Nicole Lundeen, Dow Jones Newswires; +43 1 513 69 2210,
nicole.lundeen@dowjones.com