Europe’s EFSF rescue fund may be used to buy bonds: report

LONDON (BestGrowthStock) – European officials are considering plans to overhaul the euro zone’s 440 billion euro ($580.6 billion) rescue fund and use it to buy bonds of distressed governments, the Financial Times said on Monday.

The measures would make it easier to aid debt-laden countries without resorting to fully-fledged bail-outs, the newspaper said, citing people involved with the deliberations.

Only the European Central Bank has so far purchased bonds of embattled peripheral countries such as Ireland and Portugal to lower their borrowing costs, a move that proved controversial even within the bank itself.

The European financial stability facility, which is set to be replaced by a permanent fund in 2013, could also be modified to provide short-term credit lines to countries struggling to borrow on the market but not in need of a multi-year bail-out package, the FT said.

European Union leaders will agree next week to insert two sentences into the EU treaty to pave the way for the creation of the European Stability Mechanism from 2013, draft conclusions of the summit showed on Saturday.

(Reporting by Michel Rose; Editing by Kim Coghill)

Europe’s EFSF rescue fund may be used to buy bonds: report