Support Grows for Larger European Rescue Fund
Support was rising Monday for plans to increase the lending power of the rescue fund for the debt-laden euro zone countries, though it remained unclear whether a package of wider changes could be approved next month or would be delayed until March.
Meeting in Brussels, European finance ministers discussed ways to increase the financing capacity of the European Financial Stability Facility as well as broadening its role to allow it to buy bonds or extend credit to countries, perhaps to help in future bank restructuring.
Last week, the European Commission president, José Manuel Barroso, called for an agreement to increase the lending power and function of the fund on Feb. 4, when European Union leaders will meet.
Since then, Finance Minister Wolfgang Schäuble of Germany has said the government in Berlin is aiming for an agreement on a package of measures in March.
One prime concern is that any changes should be assembled in a comprehensive package so that national governments do not have to go more than once to their national parliaments to get approval.
Almost any measure that is approved is expected to require parliamentary approval, according to European officials.
The immediate crisis in the euro zone eased last week when Spanish and Portuguese bond auctions were more successful than expected. Though many analysts believe that the lull may be temporary, pressure for a quick deal has receded.
Germany, the dominant economy in the euro zone, has been consistently cautious about bailouts for countries using the euro and appears opposed to the idea of increasing the rescue fund above 440 billion euros (about $585 billion).
Arriving at the meeting in Brussels on Monday, Mr. Schäuble said there was no immediate need for change but hinted that he was willing to consider allowing the fund to lend all of the 440 billion euros. To keep its triple-A rating, the fund has to keep a cash buffer and can lend only around 250 billion euros.
“In the short term, there is no need; in the medium term, we need solutions,” Mr. Schäuble said Monday.
Although Mr. Barroso called for an increase in the lending capacity, he has not proposed an increase in the overall ceiling, suggesting that a consensus on this move is close.
The European Union is changing its treaty to create a permanent bailout fund to operate after 2013, and the changes to the current fund could be one part of that more comprehensive overhaul.
Ahead of the meeting of the 17 euro zone members, finance ministers from Germany, France and four other countries with triple-A ratings held a meeting on how to discuss the implications of changes for their own borrowing costs.
The Irish finance minister, Brian J. Lenihan, said the ministers would also discuss moves to lower the interest rates for Ireland and Greece, which have already received bailouts.
Mr. Barroso is still pressing for an agreement in February, calculating that the summit meeting next month, called to debate energy policy, will be dominated by speculation over changes to the euro zone bailout fund.