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German president's signature gives green light to ESM

The German president has signed legislation approving the country's participation in the eurozone's permanent financial bailout fund. He had delayed signing the bill due to legal challenges to the legislation.

President Joachim Gauck signed into law the German parliament's ratification of the European Stability Mechanism on Thursday. This removes the final hurdle to the implementation of the eurozone's permanent bailout fund.

The president's office said in a statement that Gauck had "signed the documents with which the treaty ... setting up the European Stability Mechanism (ESM) is ratified."

The move came just hours after ambassadors from the 17 countries that make up the eurozone signed a joint declaration that amended the text of the ESM, designed to make it comply with stipulations laid out by Germany's Constitutional Court.

In a decision handed down earlier this month, the Karlsruhe-based court rejected legal challenges to the legislation that claimed it was unconstitutional. However it stipulated that Germany's participation in the fund be capped at 190 billion euros ($244 billion). Any increase would have to be approved by Germany's parliament.

Germany was the last eurozone member to ratify the 700-billion-euro fund, which is seen as a key tool in efforts to get to grips with the eurozone's ongoing sovereign debt crisis.

The ESM is now expected to come into force after a meeting of eurozone finance ministers in Luxembourg on October 8.

pfd/msh (dpa, AFP)