EFSF to put limits on bond buying

BERLIN: Europe should set limits on the amount of sovereign debt its bailout fund can buy up to stabilise a member state, a senior lawmaker from German Chancellor Angela Merkel's conservatives told Reuters on Saturday.

"Given that the European Financial Stability Facility (EFSF) is limited overall, it makes sense also to limit the purchases on the secondary market for each country," said Michael Meister, conservative deputy parliamentary leader.

There was a danger, otherwise, the fund's 440 billion euros could be quickly used up, he said.

German and France disagree over how the EFSF should be able to buy sovereign debt, German daily Handelsblatt wrote on Friday, citing an unnamed, high-ranking European Union diplomat.

France does not want to set guidelines for the EFSF on the matter, whereas Germany wants to limit the sum used for each member state and set a time limit for bond purchasing, the paper reported.

French President Nicolas Sarkozy is due to meet Merkel on Sunday in Berlin to resolve differences over how to use the euro zone's financial firepower to counter a sovereign debt crisis threatening the global economy.

Copyright Reuters, 2011