Eurozone countries agreed to extend European
Stability Mechanism (ESM) to 2 trillion from 500 billion euros, German
newsmagazine Der Spiegel said. However, the proposal was opposed by some
count
ries including Finland. But
Germany, the prime sponsor of the bailouts, considers it to be a
necessary measure. It is assumed that increased ESM can provide Spain
and Italy with bailout recourses, if necessary. ESM will use the same
financial tools as European Financial Stability Facility (EFSF). The
funds received from eurozone will be used to support indebted countries
by purchasing their government bonds, for example. Funds from private
investors are to be spent for less risky measures to overcome recession.
Apart from crisis resources, European Central Bank also supports the
economy of euro area. So in early September the regulator announced its
"unlimited bond-buying plan" to reduce borrowing yields. The ESM/EFSF
was criticized many times by different European politicians,
particularly, by opposition. They said countries with conservative
fiscal policies should not support troubled economies of the eurozone
countries. The Bundestag and Bundesrat opposition parties filed six
lawsuits in the German Constitutional Court objecting to the country's
participation in the European rescue packages for the euro area. More
than 37,000 plaintiffs had argued that the ESM was an illegal transfer
from Berlin. However, the court rejected the complaints in September.
