BRUSSELS, Dec. 13 (UPI) -- A draft of changes proposed for the Lisbon Treaty in Europe says bondholders could be responsible for part of future economic bailouts, the EUobserver reported.
A summary of the changes reviewed by the EUobserver says: "The member states whose currency is the euro may establish a stability mechanism to safeguard the stability of the euro area as a whole. The granting of financial assistance under the mechanism will be made subject to strict conditionality."
The first sentence allows for the EU to establish a new, permanent fund that would be used to bail out countries in trouble beginning in 2013.
The second sentence opens bondholders up to the possibility of having to share in the expense of future bailouts.
The summary says: "Rules will be adapted to provide for a case by case participation of private sector creditors, fully consistent with IMF policies. In all cases, in order to protect taxpayers' money, and to send a clear signal to private creditors that their claims are subordinated to those of the official sector, a European Financial Stability Mechanism loan will enjoy preferred creditor status, junior only to the International Monetary Fund loan."
