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Euro zone rescue fund increase under debate

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Euro zone rescue fund increase under debate

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Euro zone finance ministers meeting in Brussels are divided about how to increase the effective capacity of a rescue fund. No final decision is expected swiftly on the European Financial Stability Facility’s nearly 440 billion euro lending capacity. Broader anti-crisis measures seem to be in view for a summit of the leaders in March.

The fund can borrow money on markets with euro zone government guarantees of up to 440 billion euros, but the amount it can lend to countries in need is only around 250 billion. If Portugal and Spain called for help, it would stretch resources.

The biggest euro zone economy, Germany, is key to any agreement on increasing the fund. France appears open to it. To help struggling economies reduce their debts, some euro zone members believe it will be necessary to lower the punitive interest rate charged for EFSF loans, but Germany is against this.