Here's What You Need To Know About The Proposed 'European Monetary Fund'


This morning saw the announcement of a Euro zone bailout fund dubbed the EMF, or European Monetary Fund.

It is backed by Germany and France, and is seeking to provide and IMF style backstop for Euro zone members.

The EMF would function by allowing troubled states to roll over their debt to the EMF, which would then distribute EMF debt to the sovereign debt investors. Details beyond this are scarce at the moment.

What is known is the E.U. directed creation of the EMF is not backed by the European Central Bank, which holds the purse strings in the Euro zone. The ECB says this new body would encourage profligacy among Euro zone states, instead of the austerity they are trying to ensure.

This program is not likely to be passed quickly and, if the ECB is not on board, may not have access to the sort of capital necessary to bailout a big troubled state like Spain or Italy.

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