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EUR 500bln Lending Capacity of EFSF/ESM is a Minimum According to a draft ESM Treaty

ESM board of governors may decide to raise combined ESM lending capacity, according to draft ESM Treaty.

ESM Treaty will enter into force when countries representing 90% of subscribed capital ratify it according to the draft.

Collective action clauses will be introduced in all new Euro-zone bonds one month after ESM treaty enters into force.

Euro-zone country can only apply for ESM for help if it started ratification of fiscal compact treaty.

ESM’s EUR 80bln paid-in capital is still to be paid over 5-years, but any Euro-zone country may pay it quicker.

Unrealistic to expect EFSF to leverage up to 1 trillion.

The report is Asia (read China)  is very reluctant to invest in the EFSF Special Investment Vehicle. A more realistic number would be double according to sources.The EURUSD is moving back and forth as EURCHF talk and the reluctance to buy the EURO has the pair trading violently.

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