BERLIN, July 31 Germany's finance ministry
reiterated its view on Tuesday that there is no need to grant a
banking licence to the euro zone's new bailout fund, a move that
could enable it to buy virtually unlimited amounts of debt
issued by troubled euro zone states.
According to the treaty, the European Stability Mechanism
(ESM) will not have a banking licence, a finance ministry
spokeswoman said. "There is no need for it," she added.
The German daily Sueddeutsche Zeitung, quoting European
diplomats, reported earlier that supporters of the idea, long
pushed by France, were gaining ground.
With a banking licence, the ESM - which is due to replace
the current temporary baliout fund, the EFSF - could borrow cash
from the European Central Bank and purchase bonds from heavily
indebted countries such as Spain or Italy.
The article caused several members of Chancellor Angela
Merkel's centre-right coalition to reiterate their fierce
opposition to the idea, which they fear could fuel inflation and
jeopordise the ECB's independence.