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Brussels - The eurozone may raise the combined lending power of its bailout funds to close to €700bn from €500bn in a trade-off between German opposition to committing more money and calming markets, eurozone officials said.
Eurozone finance ministers and central bankers will discuss the size of their bailout funds - the temporary European Financial Stability Facility (EFSF) and the permanent European Stability Mechanism (ESM) - in Copenhagen on March 30-31.
The €440bn EFSF and the €500bn ESM now have a combined lending ceiling of €500bn which means that in the 12 months from July 2012 when they coexist, they cannot lend together more than €500bn.
Markets have long been pushing for a higher capacity for eurozone lending to make sure the 17-nation bloc has enough money to bail out even its large members like Italy or Spain, should that be necessary, but Germany has been adamantly opposed to such an increase.
“Given that the situation is difficult in several countries, it seems to me the easiest option is the least ambitious one,” one senior eurozone official said.
Out of its €440bn of lending power, the EFSF has already committed €192bn to bailouts for Greece, Ireland and Portugal.
“One possibility would be to say the EFSF has made commitments of €192bn but the ESM should start fresh with €500bn,” the senior eurozone official said.
“The combined lending capacity would go from €500bn to €692bn, roughly €700bn. That is one of the options under discussion and that is probably the least ambitious and therefore politically the easiest,” the official said.
A second eurozone official confirmed this was a likely solution, although both noted several options were being examined and the final decision was still uncertain.
Eurozone finance ministers and central bankers will discuss the size of their bailout funds - the temporary European Financial Stability Facility (EFSF) and the permanent European Stability Mechanism (ESM) - in Copenhagen on March 30-31.
The €440bn EFSF and the €500bn ESM now have a combined lending ceiling of €500bn which means that in the 12 months from July 2012 when they coexist, they cannot lend together more than €500bn.
Markets have long been pushing for a higher capacity for eurozone lending to make sure the 17-nation bloc has enough money to bail out even its large members like Italy or Spain, should that be necessary, but Germany has been adamantly opposed to such an increase.
“Given that the situation is difficult in several countries, it seems to me the easiest option is the least ambitious one,” one senior eurozone official said.
Out of its €440bn of lending power, the EFSF has already committed €192bn to bailouts for Greece, Ireland and Portugal.
“One possibility would be to say the EFSF has made commitments of €192bn but the ESM should start fresh with €500bn,” the senior eurozone official said.
“The combined lending capacity would go from €500bn to €692bn, roughly €700bn. That is one of the options under discussion and that is probably the least ambitious and therefore politically the easiest,” the official said.
A second eurozone official confirmed this was a likely solution, although both noted several options were being examined and the final decision was still uncertain.
