The eurozone's new permanent fund to bail out
struggling economies and banks has been formally launched at a meeting
of finance ministers in Luxembourg. The European Stability Mechanism
(ESM) will have a full lending capacity of 500bn euros (£400bn; $650bn)
by 2014. It will initially run alongside, and then eventually replace,
the European Financial Stability Facility (EFSF).
Europe's largest economy, Germany, will make the biggest
contribution to the fund, about 27% of its total. The ESM, which is a
new European Union agency, will be chaired by Jean-Claude Juncker, the
Prime Minister of Luxembourg and chair of the Eurogroup. The launch of
the ESM "marks an historic milestone in shaping the future of monetary
union", Mr Juncker said after the inaugural meeting of the Eurogroup of
finance ministers that makes up the fund's board.
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