The launch Monday of a permanent European rescue fund is "good news for Europe," said Jean-Claude Juncker, president of the Eurogroup of finance ministers. The European Stability Mechanism (ESM) came into force Monday as a permanent agency of the European Union with a mandate to provide financial help to eurozone countries in difficulty.
It is designed to eventually replace the temporary European Financial Stability Facility (EFSF) and although eurozone countries are funding the ESM's start-up, its loans will come from its own funds.
Those are expected to reach 500 billion euros by 2014, money borrowed by the ESM through bond sales on financial markets to loan to struggling countries. However, critics worry that even that amount will not be enough to save struggling treasuries, including those of Italy and Spain, if these countries ultimately request help.
Juncker spoke during the first meeting of the board of the ESM at its permanent home in Luxembourg, the same day that eurozone finance ministers gathered there