The Eurogroup agreement to recapitalise ailing banks with direct capital injections from the ESM has given rise to differing reactions in Germany.
Translated from the German
As the Handelsblatt reported, finance minister Minister Wolfgang Schäuble (CDU) praised the agreement as an "integral step towards a banking union". The ESM could "only be the final resort for any ailing bank, and only be accessible under strict conditions. If some have the expectation that when a bank needs capital in the future, it can simply turn to the ESM, this is of course nonsense", Schäuble said.
Reuters Deutschland reported that the SPD does not intend to back the rules agreed for the ESM on Thursday. SPD politician for budgetary policy, Carsten Schneider, stated that the plans violated German law. "The ESM will now gradually be converted into a bank liability fund", he predicted. Even the acquisition of existing banking risks was now possible.
Although Christian Democrat representatives signalled general approval of the deal, they criticised the fact that the ESM could have the capacity to act retrospectively. The vice-leader of the CDU parliamentary group, Michael Meister, described the agreement in the Handelsblatt as a great success for German finance minister Wolfgang Schäuble. His colleague, Norbert Barthle, said that the deal was going in the right direction, but admitted: "I would have welcomed it if any retrospective actions had been made completely impossible".
The CDU chairman of the finance committee, Hans Michelbach, went even further: "No old cases should be taken on board by the new instrument. The new rules should apply only to future problem cases", he said.
The Federal Association of German Banks (BdB) welcomed the agreement. Its chief executive Michael Kemmer stressed that the ESM should only ever be the last resort, to be considered when all other sources of support had been exhausted. The close relationship between banks and state financing would, however, not be resolved by the new instrument, he said.
The Bundestag has yet to agree to the new ESM instrument - and it has therefore a not inconsiderable blocking power.
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