Borg: No cash for euro currency fund

Sweden's Finance Minister Anders Borg has lent his support to a German initiative to create a European currency fund to support euro countries with budgetary problems, but said that Sweden would not be contributing finance.

“Swedish taxpayers money will not be spent on this,” Borg said to journalists at the Government Offices on Tuesday.

Borg expressed support for the initiative, however, saying that the Greek crisis has shown that regulations need to be tightened, and the tools for crisis management improved.

The proposal to establish the European currency fund is in response to several euro countries, with Greece at the forefront, experiencing record budget deficits and spiralling state debt in the wake of the finance crisis and the recession.

Euro countries are not permitted, according to existing regulations, to give each other direct financial support and to ask the International Monetary Fund (IMF) for assistance, which EU member states Lithuania and Hungary have done, is politically sensitive within the currency union.

“It is of the utmost importance to tighten the regulations currently applicable to euro countries. There are a number of euro countries which have seriously mismanaged their economic policies and have thus significant deficits,” Anders Borg said.

A tightening of the rules and sanctions for countries which break the agreed budget rules are, according to Borg, a prerequisite for the establishment of the fund which is being touted by several of the larger euro countries.

“If you want to have a fund which part-finances and eases the situation for countries in crisis then a strict regulatory framework must be attached to it. The current set up has not provided for any possibilities to assist countries with significant economic concerns.”

Borg wants to see a “tangible monitoring” of the countries which do not keep their houses in order and has noted the German demand for “stronger sanctions.”

The proposals aired to address the crisis, and the budget problems in Greece and other European countries are, according to Anders Borg, a failure on the part of many European governments. The currency union itself, despite all its problems, he regards as positive.

In response to a question over the impact of a currency fund on Sweden, Borg replied:

“In the best case it can contribute to more ordered public finances in the euro countries. This is also good for Sweden. But we are not in the euro and our public finances are in good shape.”

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