The ESM is an integral part of the European Central Bank's bond-buying scheme, announced on Thursday.
But as things stand neither the ESM nor the EFSF is allowed to do that.
ECONOMIST: How much do Greece and the rest of Europe stand to lose?
That said, the downgrades of France and Austria have created technical problems for the ESM's construction.
As a result, any immediate obstacle to the ESM, the fiscal compact and the OMT disappeared.
One consequence is that the ESM did not come into effect as planned on July 1st.
Specifically, in regards to conditions of the ESM which call for a single regulator by January 1, 2013.
FORBES: Capital Punishment and Capitulation: Why Spain will find it difficult to move forward
The ESM was supposed to start operating this month, but there have been ratification delays in several countries.
The ESM can start operating once member countries representing 90% of the fund's capital commitments have ratified it.
The bailout programme for Greece dates back to 2010 and does not depend on the EFSF or ESM.
BBC: German court to rule in September on eurozone bailout fund
And cash-strapped countries, such as France, are reluctant to pay in a lot of capital to the ESM quickly.
ECONOMIST: The euro zone��s rescue strategy still does not add up
Much faith is placed in the ESM, to be launched on July 1st.
ECONOMIST: The euro zone��s rescue strategy still does not add up
An ESM bailout would classify Spain as a second-class borrower in a formal sense and actually delay its rehabilitation.
Merkel is also opposed to the idea of having the ESM run parallel the EFSF, according to the reports.
FORBES: EU Summit: Parallel Bailout Funds, Sanctions, And Money For The IMF
The ESM would help fund any new government borrowing, while the ECB would buy bonds in the secondary market.
Investors now worry that any official rescue, whether by the ECB or the ESM, will claim a similar privilege.
But in a recent speech in Austria, the prospective head of the ESM, Klaus Regling, said flatly that was wrong.
They also brought forward the date when the permanent rescue mission, the European Stability Mechanism (ESM), will be up and running.
There will definitely be a difference between EFSF or ESM funding on the price of extant and future Spanish sovereign debt.
FORBES: Why the Spanish Banking Bailout Could Fail: Fat Lady Still to Sing
That would have been a 10bn euro direct injection of equity capital into Cyprus's weak banks by the European Stability Mechanism (ESM).
All that a banking licence would do would be to make it easier for the ESM to borrow up to that limit.
Wolfgang Bosbach, who also voted against the ESM, rejects comparisons to the tea party in America, which has cleft the Republican Party.
Assuming it passes that test, the ESM cannot be used for direct bank recapitalisation until a European supervisor is put in charge.
The German Constitutional Court had just given the green light for the ESM - the eurozone's permanent bailout fund - to go ahead.
What has been clarified is bringing the new permanent crisis resolution mechanism (ESM) forward to July 2012, one year earlier than initially planned.
Germany's 27% share in the ESM when it fully takes over from the EFSF in 2014 will come to just under 190bn euros.
Germany will account for 27% of contributions to the ESM, paying out 21.7bn euros in cash and providing guarantees worth a further 168.3bn euros.
The head of the Bundesbank, Jens Weidmann, told the judges that financial markets had already "partly priced in" a delay to the ESM's introduction.
Debtor governments would have to make a formal request for help - a bailout - from the ESM or its sister fund the EFSF.
Structure has been partially addressed by the new focus of the EFSF and ESM along with the supranational issues addressed by the fiscal compact.
FORBES: Currencies, Credit Ratings and the Compact: Affairs of States
In September, though, they will see the ECB probably unveil its bond-buying plan and a German constitutional court rule on the ESM emergency mechanism.
FORBES: History Says Buy Stocks Ahead Of Bernanke's Jackson Hole Speech
应用推荐