The German Cabinet, led by the Chancellor Angela Merkel, approved today a new legislation that allows Germany to participate in the creation of the European Stability Mechanism (ESM), the permanent rescue fund.
Germany has finally responded to mounting international pressure and approved the creation of the Permanent rescue fund; however eyes will remain on the nation to approve increasing the capacity of the fund.
After German ministers approved the creation of the rescue fund, the vote now will go to the German parliament for ratification by June 15 along with the fiscal compact, the famous intergovernmental budget rules.
Germany in the only nation rejecting the expansion of the European rescue fund, noting that the nation is the largest contributor to the euro-area rescue fund therefore Germany will pay more than others to prevent the contagion from spreading into larger economies, which eventually will result in a euro-collapse.
The Spanish Prime Minister, Mariano Rajoy told the parliament in Madrid we need to advance in the design of the European firewall,adding that Spain considers it to be of utmost importance to increase the limit as soon as possible and is working on that.