ESM bailout for stronger euro countries

The European Stability Mechanism (ESM) uses funds from member countries to buy low-interest bonds from strong European countries, ESM chief Klaus Regling said in Vienna Monday. The funding is therefore not used in the first instance to aid problem nations in the European area, he added. The Stability Mechanism recently acquired a first-installment of 32 billion euros from member nations, 900 million of which came from Austria, the APA reported. Regling said all nations had contributed their sum on time, but would not specify how much of the money had already been spent, in order to "not disturb" the markets. The funds, which should reach 80 billion euros by 2014, are invested in AAA or AA-rated state bonds and to a lesser degree bonds from creditworthy international organizations. Regling said the bonds are not directly intended for future aid programs, which "we don't touch." The ESM also considers European problem nations Ireland and Portugal to be "success stories" and to be halfway through their reform schedules, while Greece remains the "big exception," Regling added. (1 euro = 1.27 U.S. dollars)