Germany’s Constitutional Court permitted Chancellor Angela Merkel to use German funds to buoy the economies of eurozone countries that have struggled in the continent’s nagging debt crisis.
—Posted by Alexander Reed Kelly.
The New York Times:
With the ruling, the 17 countries of the euro zone will be able to move ahead with the establishment of the European Stability Mechanism, something like a continental version of the International Monetary Fund. The mechanism will handle bailouts and work in tandem with the European Central Bank to buy the bonds of countries such as Italy and Spain that are straining under high interest rates.
The court ruled that Germany could proceed with its contribution to the mechanism but set certain conditions, including a requirement for parliamentary approval of any increase in the agreed German contribution of 190 billion euros, or about $240 billion. While unlikely to still the crisis entirely, a rejection could have unleashed new waves of instability on the financial markets and thrown the fitful march toward European integration into question as the architects of the rescue rushed back to the drawing board.
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