Accessibility links

Breaking News

New Eurozone Rescue Fund Launched

The eurozone's permanent bailout fund has been launched at a Luxembourg meeting of the finance ministers from the 17-state group.

The European Stability Mechanism (ESM) will have a full lending capacity of 500 billion euros ($650 billion) by 2014.

Countries will start making their first payments into the fund this week.

The fund will be used to support struggling economies in return for strict fiscal and structural reforms.

The ESM will initially run alongside and then replace the European Financial Stability Facility (EFSF).

Its inauguration on October 8 comes amid increasing uncertainty over Greece's bailout and anticipation that Spain will also seek financial aid.

The EFSF has already lent 190 billion euros to Greece, Ireland, and Portugal.

There are concerns that the ESM's 500-billion-euro reserves will not be enough to save the eurozone.

Athens Braces For Protests

Meanwhile, in related news, some 7,000 police officers have been deployed to Athens ahead of a planned visit by German Chancellor Angela Merkel.

Many Greeks blame Merkel for forcing them to accept harsh austerity measures in exchange for an EU-IMF bailout deal.

The six-hour visit by Merkel on October 9 will be her first since the Greek debt crisis began three years ago.

Police expect her visit to ignite large-scale protests and possibly violence.

Greece's main labor unions staged a protest rally in front of the Finance Ministry in central Syntagma Square on the evening of October 8.

Unions have called a three-hour strike tomorrow to coincide with Merkel's planned meetings with Prime Minister Minister Antonis Samaras.

Greece is negotiating a 13.5-billion-euro austerity package with the EU and the IMF in order to receive the next 31.5-billion-euro tranche of aid.

Based on reporting by Reuters, dpa, AP, and the BBC