German Chancellor Angela Merkel said that European efforts to resolve the debt crisis are making progress, even as “imbalances” in euro-area economies show that the task is far from complete.
“We’ve come a good way along the mountain path, but we’re not completely over the mountain,” Merkel told reporters in Rome late yesterday after talks with Italian Prime Minister Mario Monti. “I suspect that in the next few years there will continue to be new mountains -- there won’t be a celebratory event in which we say we’re over the mountain and now we can sit among the trees and say that we’ve done it.”
Europe plans to equip the ESM with 80 billion euros in cash and give it the right to call another 620 billion euros in an emergency. The total would enable it to lend 500 billion euros and maintain a buffer to garner an AAA credit rating when it is set up in July. Germany has been the main holdout against proposals to let the ESM tap the remaining 250 billion euros in the temporary fund, the European Financial Stability Facility.