http://www.reuters.com/article/2011/12/04/... (Reuters) - The Federal Reserve, along with the 17 euro zone national central banks, may help provide the International Monetary Fund with funds that could be used to aid debt-ridden states, a German newspaper said.
Die Welt cited sources close to the negotiations as saying the euro zone central banks could pay at least 100 billion euros ($134.2 billion) into a special fund that could be used for programs for nations struggling to control their debts.
"Also other central banks, for example the U.S. Federal Reserve, are apparently prepared to finance a part of the costs," the paper said in an advance copy of an article to appear on Monday. Treasury Secretary Timothy Geithner may discuss the idea in the coming weeks when he visits Europe, the paper said.
Officials had said on Saturday that talks on the size of loans from euro zone central banks were starting at a technical level after finance ministers from the currency union gave the go-ahead to explore the idea. The idea is for the IMF to be able to match the new firepower of the euro zone bailout fund, which is being leveraged.
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Other central banks such as the U.S. Federal Reserve seems to be willing to finance part of the costs . U.S. Treasury Secretary Tim Geithner will come to Europe this week, to meet with political leaders and central bankers. Such a rescue fund could be said to be a part of the plans, want Angela Merkel (CDU) and Nicolas Sarkozy in Paris to discuss.
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Germany is prepared to soften language in the euro zone's permanent bailout mechanism compelling bondholders to accept losses in exchange for much stricter budget rules, four sources have told Reuters.
The shift would not completely remove the possibility of private bondholders having to accept losses in the future, but it would align the statutes of the European Stability Mechanism more closely with IMF rules, creating a more-level playing field for private buyers of euro zone sovereign debt.
The hope is that will reassure private bondholders that they are not being singled out for losses by European policymakers, bolstering their confidence in buying euro zone bonds - and potentially helping Italy and other under-pressure borrowers.
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Zero Hedge's
http://www.zerohedge.com/news/latest-rumor... take:
"Yet there is one difference: whereas Germany is appealing to Europe's people to voluntarily hand over their freedom and sovereignty to Merkel, the Fed is acting on the assumption that it already has these in hand. Luckily, none of this matters as there is football night... then Dancing with the Stars night... then Jersey Shore night... then rinse and repeat..........."
