Euro bailout funds unlikely to reach $1.3 trillion

Several European finance chiefs indicated Friday that the 17 countries that use the euro are unlikely to boost their financial backstops to the (euro) 1 trillion ($1.3 trillion) demanded by many of their international partners.

By (AP)

Published: Fri 30 Mar 2012, 3:45 PM

Last updated: Tue 7 Apr 2015, 11:11 AM

A number of international institutions, as well as the U.S. and China, want the eurozone to significantly increase its defenses against a debt crisis that has been haunting the currency union for more than two years.

But Jean-Claude Juncker, the prime minister of Luxembourg who also chairs the meetings of eurozone finance ministers, said Friday “we are a slice away” from increasing the bloc’s bailout funds to (euro) 1 trillion.

Finnish Finance Minister Jutta Urpilainen meanwhile said a proposal from the EU’s executive that calls for a lending capacity of (euro) 940 billion ($1.25 billion) “is too high” for her country.

A more likely result of Friday’s meeting in Copenhagen, Denmark, would be an overall firewall worth around (euro) 800 billion — of which some (euro) 300 billion ($398 billion) has already been spent in the bailouts of Greece, Ireland and Portugal.

That proposal, which would leave some (euro) 500 billion ($664 billion) in new funds available for helping debt-ridden governments, has been backed by Germany, the eurozone’s largest economy and the biggest contributor to the bailout funds.

“That seems to be getting into the ballpark of what is required,” said Irish Finance Minister Michael Noonan, although he still favored the European Commission’s proposal for(euro) 940 billion in total.

“That would be a very impressive figure and it would send a very clear signal out to the markets,” he said.

More news from Banking and Finance