Date: Wednesday 20 Jun 2012
Italy has proposed that European funds from the temporary European Financial Stability Facility (EFSF) as well as the permanent European Stability Mechanism (ESM) be used to buy sovereign debt in the secondary market.
The country's prime minister offered the idea at the Group of 20 (G-20) summit that will now be discussed this Friday in Rome, where the leaders from Spain, Italy, France, and Germany will meet.
"The idea is to stabilise borrowing costs, especially for countries who are complying with their reform agendas, and this should be sharply distinguished from the idea of a bailout," said Mario Monti at the end of the G-20 summit at Los Cabos, Mexico.
French President Francois Hollande later added that the idea is part of the discussion and not a final decision.
The EFSF is funded with €250bn while the ESM has €500bn. When the former expires in July, the latter will go into effect with the combined funds.
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