EFSF Chief: Euro-Zone Debt Strategy Is Working Outside Greece
FRANKFURT (Dow Jones)--The euro zone΄s strategy to address its sovereign debt crisis is working outside Greece, and permanent transfers within the currency bloc will never be necessary, the head of the euro-zone΄s rescue fund said Wednesday.
"The worst is over in Ireland," which is a "success story," Klaus Regling, chief executive of the European Financial Stability Facility, said at a conference. The country is likely to be able to return to markets as planned if it continues with its reforms, he said.
Portugal is also making progress with its reforms, while Italy and Spain have taken "painful decisions" and are very active, he said.
However, the euro one΄s strategy isn΄t yet working in Greece, which is a "special case," he said. A second Greek aid program "depends on action in Greece," he said.
Regling insisted there haven΄t yet been permanent transfers of funds within the euro zone, adding that such transfers are unlikely ever to materialize.
"In my view there will never be permanent transfers in the monetary union... from north to south," the German head of the EFSF said. "I don΄t think these will be politically acceptable... or economically necessary."
Reform of the euro zone would be easier if decisions were taken by a European finance minister, Regling said. But he added that creating such a position would take time. "I΄m all in favor of starting this process," he said.
The EFSF was set up in the wake of the sovereign debt crisis to provide loans to stabilize the single currency area, in association with the European Union and International Monetary Fund. Its role is shortly to be expanded to allow it to buy sovereign bonds in the secondary market under strict conditions, in line with measures agreed by euro-zone leaders at a summit July 21.