Finland Will Get it’s Collateral
- Published on Wednesday, 04 January 2012 18:53
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The European powers that be are keen on solving in issue that creates an obstacle in the path of Greece’s bailout and they have just removed what may be the biggest hurdle. Finland was not ready to co-operate in the bailout package unless it was assured of some collateral for its investments. Finland was of the view that there must be some measure of security for the bailout loans to guarantee that it won’t be money that is poured down the drain.
European Finance ministers will conduct a meeting in Luxemburg today to discuss whether this proposal is acceptable to all the 17 members of the monetary union. There are rumours that the deal will be a lack lustre one which will then force Finland to be the lone country that’s ends up imposing collateral on Greece. According to this plan, Greece will be putting up collateral for all of Finland’s contribution to the European Financial Stability Fund (EFSF). This will compel Finland to forego the earnings, if any, from the EFSF and in case Greece actually ends up defaulting, then the collateral will have a reduced status.
The Finnish finance minister was noncommittal on whether he will agree to such a deal. The finance minister of Luxemburg said that if any collateral s made available to Finland then other countries will also demand the same; the euro is a multi-nation currency and any change that occurs in the EFSF should affect all the 17 members of the monetary union. He was of the view that there should be some equivalent trade-off for any country that wants to take collateral.
Similar talks have taken place earlier as well, with Finland reaching an agreeable conclusion with Greece on 16th August, only to end up being rejected by other member nations. The Finnish appeal for a collateral also spurred on Slovakia, Slovenia, Austria, Slovenia and the Netherlands to also demand collaterals for their respective guarantees; something that further troubled European Union’s efforts to maintain a united front on the issue.
In Finland the political scenario is highly opposed to the euro and a party which was sceptical of the euro won the third place in its general elections, thereby setting the Finnish mood and forcing the new Prime Minister to harden his stance on the bailouts.
Greece also has it part cut out, it still has to obtain money from a seemingly frustrated population so as to increase savings. The Greeks have had faced over two years of tax increases and budget cuts so as to keep the bailouts coming. Greece recently got the green signal to receive the sixth instalment of its first bailout package.