Europe bailout fund chief sees no quick China deal

Written by Reuters | Beijing | Updated: Oct 29 2011, 07:28am hrs
The head of Europes bailout fund said on Friday he does not expect to reach a conclusive deal with Chinese leaders during a visit to Beijing but expects the surplus-rich country to continue buying bonds issued by the fund.

Klaus Regling, chief executive of the European Financial Stability Facility (EFSF), said the bailout deal with Greece was an exceptional case and he saw no need to repeat it for other nations.

We all know China has a particular need to invest surpluses, he said at a news conference, referring to the countrys foreign exchange reserves of $3.2 trillion the worlds biggest stockpile.

China has been a regular buyer of bonds issued by the EFSF and analysts estimate about a quarter of its reserves are held in euro-denominated assets.

Regling was in Beijing just a day after euro zone leaders struck a last-minute deal to contain the blocs debt crisis that has undermined financial markets globally on fears that it could drag the global economy into another recession. European leaders are now under pressure to finalise the details of their plan to slash Greeces debt burden and strengthen their efforts to revive the zone.

Regling was due to meet officials from Chinas central bank and finance ministry on Friday. While China has surplus cash, Regling said he is in contact with sovereign funds globally.

He said the EFSF was designing new investment instruments and testing models to scale up the fund. He wanted to hear how the fund could structure investments that would attract capital, he said.

The 440-billion-euro EFSF was set up last year. Regling said Tier-1 capital at large European banks would be raised temporarily to 9%.