HELSINKI/AMSTERDAM, July 2 Finland will block
the euro zone's permanent bailout fund from buying government
bonds in the open market, the Finnish government said on Monday,
while The Netherlands also indicated opposition to the
Comments suggesting a rough time ahead for the idea followed
euro zone leaders' agreement at a summit last week to take
steps to shore up their monetary union and bring down Spanish
and Italian borrowing costs.
They gave few details on how they might use the temporary
EFSF and permanent ESM rescue funds to buy bonds.
A Dutch finance ministry spokesman said on Monday his
government did not like the bond-buying idea but did not
explicitly say the Netherlands would block the plan, saying only
that it would evaluate purchases on a case-by-case basis.
"The prime minister said on Friday he is not in favour of
buying up bonds," said Niels Redeker, spokesman for the Dutch
finance ministry. "Using the existing instruments to buy up
bonds will be expensive and can only be done if there is
unanimity (between member states). That means the Netherlands
would need to vote in favour."
On the insistence of Spain and Italy, now in the eye of the
euro debt storm, euro zone leaders decided last week to soften
slightly the terms on which countries that observe EU rules and
recommendations can get euro zone help to lower market premiums.
The agreement after last week's summit said interventions on
bonds markets by the ESM and EFSF rescue funds would be carried
out by the European Central Bank, acting as an agent for the
But ESM bond buying on the open market would require
unanimous approval from the 17 euro countries and that seems
unlikely because Finland and the Netherlands are against it,
the Finnish government said a report to a parliamentary
"Finland finds it an inefficient way to stabilise markets,"
said a senior Finnish government official.
"Due to intervention of Finland and, among others, the
Netherlands, the possibility of ESM operations in the secondary
markets was blocked," the government said in the report, to
parliament's influential Grand Committee.
It was not immediately clear which other governments were
opposed to the move.