Ewald Nowotny, a member of the European Central Bank’s Governing Council, finds that there are arguments in favour of issuing a banking licence to the European Stability Mechanism (ESM), the future eurozone rescue fund, to enable it to borrow directly from the ECB. “I think that there are arguments in favour of doing so,” said Nowotny, who is also governor of the Austrian Central Bank (OeNB), interviewed by Bloomberg,on 25 July. “There are also other arguments, but I consider the debate under way,” he commented before adding that he was “not aware of specific discussions [on the subject] in the ECB at this stage”.

The ESM, which will take over from the European Financial Stability Facility (EFSF), will not become a reality before 12 September, when the German Constitutional Court hands down its decision on complaints lodged to block ratification of the rescue fund and fiscal pact.

Several countries have called for issuing a banking licence to the ESM to enable it to be refinanced directly by the ECB, but Germany strongly objects to the idea. Such a measure would significantly increase the ESM’s firepower at a time when markets are counting on a comprehensive rescue plan for Spain.