Christine Lagarde, France’s finance minister, suggested that time may be near to increase the size of The European Financial Stability Facility (EFSF), the European Union’s financial bailout fund reserve.
Speaking at the world economic forum at Davos, Switzerland, Lagarde confirmed that leaders were mulling enlarging the 440-billion euro fund – which has already been used to bailout Ireland – should the need arise. (Fears remain that euro zone members Spain and Portugal may be at risk of requiring huge rescue packages).
However, Germany (the most powerful euro member) is adamantly opposed to enlarging the fund.
I don't think there is yet general consensus because it's again work in progress, she said. But it's clearly one avenue for the EFSF to actually get involved in markets.
Lagarde added that the EU could also use ESFS money to repurchase national bonds.
We are working on making the EFSF more efficient, more flexible, and if it needs to be bigger for that matter, so be it, Lagarde said.
The EFSF was established in May 2010 as a special-purpose financing vehicle for euro zone members encountering financial woes.