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EU ministers may boost bailout fund
Published in The Saudi Gazette on 17 - 01 - 2011

zone finance ministers face one big question when they meet in Brussels Monday and Tuesday: Are they willing to fundamentally change their strategy for solving the debt crisis that has rocked the currency bloc over the past year? Over the past week, calls to boost the euro zone's €750 billion ($1 trillion) bailout fund by expanding its size and - perhaps more importantly - by giving it broader powers have grown louder.
French Finance Minister Christine Lagarde told journalists Friday that she and her counterparts were discussing giving the fund the power to buy government bonds on the open market - a move that would take pressure off countries that have seen bond prices fall and funding costs rise.
Belgium's Finance Minister Didier Reynders, meanwhile, said the size of the fund should be doubled, to €1.5 trillion ($2 trillion). Jean Claude Trichet, the head of the European Central bank, and two top officials of the European Union's executive commission have also thrown their weight behind a new role for the bailout fund, which has so far been limited to providing rescue loans to cash-strapped countries.
The European Commission last week circulated a document among EU member states with some suggestions on how to broaden the scope of the fund beyond bailouts. But an EU official familiar with the document said talks were still at an early stage and that he didn't expect finance ministers to take big any big decisions next week.


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