European Commission says direct bank recapitalisation allowed by treaty

Date: Monday 02 Jul 2012

The treaty governing the Eurozone's permanent bailout fund European Stability Mechanism (ESM) does not need to be changed in order to allow the direct recapitalization of banks, said the European Commission (EC) on Monday.

EC spokesman Simmon O'Connor said that articles 14 - 18 of the treaty set out the instruments that may be used to guarantee the Eurozone's financial stability.

"Article 19 continues that the board of governors may decide to make changes to that list," said O'Connor. "That is our understanding of where we stand on that, that it would not require a change to the treaty."

SC

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