Talks with Chinese officials on China's contribution to the new European investment instruments were "productive" and "friendly," the head of the eurozone's bailout fund said here Saturday.
Klaus Regling, chief executive officer of the European Financial Stability Facility (EFSF) said in a lecture at Tsinghua University that the purpose of his visit to China was to "listen to potential investors" and "get their views" so as to make the EFSF bonds "interesting" to buyers.
But Regling refused to give further details, saying the meetings were "confidential."
Regling came to Beijing after a deal was sealed by European leaders Thursday. As part of the deal, it was decided that the EFSF's firepower will be bolstered either through offering credit enhancement to sovereign bonds or via a Special-Purpose Investment Vehicle (SPIV), believed to attract investors outside the EU.
The SPIV is still in a design phase, and how the EFSF will make use of the two systems is still undecided, Regling said.
He said his conversations with Chinese officials were partly aimed at getting their preference, in order to find the "right structure" that would appeal to potential investors, adding the leverage mechanism would be "simple" and "transparent", just like home mortgage loans.
Talking about what protection bond-buyers would get, the EFSF CEO said one primary idea was that the EFSF will assume the first 20 percent of any possible losses in SPIV, while investors may have to bear any additional cost.
Regling said China has been a regular buyer of bonds issued by the EFSF, although he didn't identify how much the world's second largest economy has invested.
While China has the world's largest foreign currency reserve (worth more than 3.2 trillion U.S. dollars), Regling said he is also in touch with other sovereign funders around the globe.
The EFSF was created by the eurozone in mid 2010 to sell bonds to financially troubled euro nations, and to buy sovereign bonds on the secondary and primary markets as well as offer loans for governments to recapitalize banks.
The 440-billion-euro (about 622.5 billion U.S. dollars) EFSF will be expanded to 1 trillion euros after European leaders agreed Thursday to leverage existing guarantees by as much as five times.