EU Hopes to Tap China for Rescue Funds

As European leaders explore the possibility of an International Monetary Fund (IMF) channel for money to boost the rescue fund worked out in the debt crisis agreement, China was not so eager to commit to contributing.

Euro zone leaders hoped to win contributions from China for the enlarged rescue fund, part of the deal worked out in a long meeting ending in the week hours of Thursday morning, Bloomberg reported Friday. China, however, said that it required more information before plunging into any plan, such as the structuring of senior debt in the arrangement and the extent of loan guarantees involving countries such as Italy.

According to Klaus Regling, chief executive officer of the European Financial Stability Facility (EFSF), that body may explore setting up a special purpose vehicle with the IMF as a lender of last resort. He said that China has not yet set any conditions for buying EFSF bonds, after being a “good” and “loyal” purchaser so far.

However, Tomo Kinoshita, an economist and deputy head of Asia economics research at Nomura Holdings Inc. in Hong Kong, said in the report that China might look to boost its influence at the IMF in exchange for participation.