In a surprise change to the German stance Chancellor Angela Merkel said today at a press conference following her meeting with Italian Prime Minister Mario Monti that Germany is willing to increase its support to the European Stability Mechanism. The comment is a shift from the reluctance to commit or even discuss expanding the size that is for now set at 500 billion euros and should be activated by mid this year.

She did acknowledge the difficulty faced in leveraging the size of the current EFSF as hoped before and that to us is a good signs that leaders are walking in line with market assessments which will start to limit the uncertainty and volatility.

As for her meeting with Monti, the Chancellor acknowledged the efforts of economic and fiscal reforms in Italy and praised the quick implementation. She also sounded confidence and hope that the EU leaders will agree on the measures for deeper fiscal integration at the January summit.