EU bailout fund officially launched

The EU's new permanent bailout fund will come into existence next Monday.

It has been confirmed that Eurozone finance ministers, who form the ESM's board of governors, will hold their inaugural meeting in Luxembourg next week, two years after EU leaders endorsed the idea of setting up such a permanent institution.

The fund's lending capacity will eventually reach its full capacity of €500bn by 2014.

The fund's first recipient is expected to be Spain, which may start drawing down funds for its ailing banks next month.

However. the Managing Director of the European Stability Mechanism says the issue of legacy bank debt has not yet been discussed by any EU body.

Klaus Regling made the remarks at the launch of the ESM in Brussels.

In June, EU leaders pledged to break the link between bank and sovereign debt.

The Taoiseach Enda Kenny has previously said it was his understanding that the deal included legacy debt.

President of the Eurogroup Jean-Claude Juncker is hailing the ESM as an historic milestone.