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Analysis of a safety net

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Analysis of a safety net
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The European Financial Stability Facility is the euro zone’s safety net set up in May of 2010 to combat the region’s sovereign debt crisis in the wake of Greece’s troubles.

The plan now is to boost the amount available above the current 440 billion euros which would mean each of the 17 countries using the euro putting in additional funds.

Even with that expansion, the percentages would remain the same, with the biggest economies contributing the most.

Germany account for just over 27 percent followed by the other large euro zone nations France, Italy and Spain.

With the rescue fund boosted to 780 billion euros it could buy bonds to support countries under attack by markets, bail out members who need funding and help them prop up failing banks.

By boosting the size and powers of the fund the hope is to give it greater clout, stop contagion to the rest of the single-currency area and give the financial markets more confidence in the euro.