From The Telegraph:
Germany's Bundesbank has raised serious objections to EU summit plans to shore up Italy and Spain by channelling up to €200bn (£170bn) from central bank reserves through the International Monetary Fund (IMF).
9:57PM GMT 11 Dec 2011Europe's leaders agreed in Brussels to mobilise the reserves of the 17 national banks of the eurozone system to finance the IMF, hoping that this will then lever fresh money from China, Japan, and other global powers.
Andreas Dombret, a Bundesbank board member, said Germany's central bank cannot take part in any form of covert funding for EMU states in trouble through the bank-door of the IMF, saying further money can be used only to support the normal operations of the Fund."The money cannot migrate into some sort of special pot that is used exclusively for Europe. That would be a clear breach of the prohibition of monetary financing of states. The German Bundesbank has explicitly ruled this out," he told the Handelsblatt newspaper.
Mr Dombret said the Bundesbank's share of any such IMF package would be €45bn and is "inherently risky". It would require an indemnity of some kind from the German parliament. This in turn would breach the €211bn ceiling already set by the Bundestag on EU bail-outs.
Mario Draghi, the head of the European Central Bank (ECB), raised similar concerns last week, warning that the ECB is not willing to use the IMF as a conduit for covert sovereign rescues in Europe....MORE
