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Sunday, 17 December 2017

Peters: More questions about firewalls

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Further to my earlier commentary on firewalls and Spain… I’m not sure exactly how this all works, but if my memory serves me correctly, then part of the EFSF/ESM policy is that any member who draws on the means of the fund immediately ceases to be liable as a contributor. Should Spain be obliged to seek help, then its contributions would fall away.

Anthony Peters, SwissInvest Strategist

As they are pegged at 11.9%, the total rescue pot of €800bn would lose over €95bn of committed funds. These would supposedly need to be made up by increased contributions by the remaining members. Greece was 2.82%, Ireland was 1.59% and Portugal was 2.51% of the original commitment, all of which is no longer there.

That presumably means that whatever commitment the EcoFin meeting places upon individual members tonight would immediately become invalid and increase the instant any one of the signatories asks for help.

Therefore, any parliament which votes in favour of either a fixed amount or even a fixed percentage of contributions to the funds has missed the point.

Why do I get the feeling that there are too many questions which nobody dares to ask or have asked for they would prefer not to know the answers?

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