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Klaus Regling becomes the chief executive of the European Financial Stability Fund

09 June 2010 13:08 (UTC +04:00)

BakÄ± - APA-Economics. Luxembourg’s prime minister said Monday that a German official will lead a new euro440 billion ($525 billion) bailout fund for the 16 countries that use the euro, BusinessWeek reported.

Klaus Regling will become the chief executive of the European Financial Stability Fund, two years after he stepped down as the European Commission’s most senior economy official, according to a statement from Luxembourg Prime Minister Jean-Claude Juncker, who heads the group of eurozone finance minister.

Germany, Europe’s largest economy, will supply up to euro148 billion in debt guarantees, the largest slice of the state backing for the fund which will borrow from markets to provide financial rescue to any indebted eurozone nation that can’t make debt repayments.

The German debt agency will also help the fund arrange the guarantees in the coming weeks.

The fund will become active later this month when at least 90 percent of the state guarantees are finalized -- and can issue bailouts until June 13, 2013.

It is one of three prongs of a euro750 billion ($1 trillion) "shock and awe" rescue package agreed by EU leaders last month aimed at soothing jittery markets by creating a financial backstop for euro states that risk default.

Some euro60 billion managed by the European Commission is currently available for any EU country in trouble. And another euro250 billion would be provided by the International Monetary Fund.