Eurozone launches permanent bailout fund

Eurozone finance ministers and European Central Bank representatives pose for a group photo during a meeting of the Board of Governors of the European Stability Mechanism (ESM) ahead of an eurogroup meeting in Luxembourg, Oct 8, 2012. [Photo/Agencies]

LUXEMBOURG - The euro area on Monday launched its permanent bailout fund, the European Stability Mechanism (ESM), as "part of a comprehensive strategy to ensure financial stability in the currency union", Eurogroup chief said.

"We took today in a very swift way a number of well-prepared decisions and resolutions to make sure that the ESM can function in a proper way," Eurogroup President Jean-Claude Juncker said at a press conference.

The 500-billion-euro ($653 billion) permanent bailout fund is designed to provide financing to distressed eurozone members if they are committed to strict fiscal and structural reforms that aim to put economies that have lost investor trust back on track.

As chairman of the ESM's board of governors, Juncker hailed the launch of the fund as "a historic milestone in shaping the future of the Eruopean Monetary Union and the euro area".

"Now it (the eurozone) is equipped with a permanent and effective firewall which is a crucial component in our comprehensive strategy to ensure financial stability in the currency union," Juncker told reporters as the eurozone finance ministers kicked off their meeting.

"The introduction of the ESM has closed a gap in the euro area's institutional architecture. The ESM itself will certainly be regarded as a reassuring presence within and outside the European Monetary Union," he added.

Juncker, also prime minister of Luxembourg, stressed that "the ESM is not a stand-alone instrument, but part of a comprehensive plan to reshape economic governance in the euro area."

The launch of the ESM, along with the legislative package on budgetary surveillance, the "fiscal compact" and the efforts to establish a single European banking supervisory body, would make the strategy of the eurozone "credible", he said.

The ESM's board of governors, which is currently holding its first board meeting, has appointed head of the eurozone's temporary bailout fund Klaus Regling as managing director of the permanent fund.

Spain's Economy Minister Luis de Guindos (L) talks with his Luxembourg counterpart Jean-Claude Juncker (R) during a meeting of the Board of Governors of the European Stability Mechanism (ESM) ahead of an eurozone finance ministers meeting in Luxembourg, Oct 8, 2012. [Photo/Agencies]