Germany's finance minister on Sunday was quoted as saying Chancellor Angela Merkel's government has agreed to finalise a package aimed at bolstering the European Union's bailout fund.
Wolfgang Schaeuble said in an interview published in Tagesspiegel that Germany plans to finalise a package that would
strengthen the EU's rescue fund, coordinate EU financial policy and help other members limit their debts.
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"We agree that we want to tie up a complete package in the coming weeks," Schaeuble was quoted as saying. "We want to prevent people from feeling that we are stumbling from one crisis to the next."
The minister said the German package would address the issue of how to overhaul the current 750 billion euros ($A1.02 trillion) fund, which can't lend out the full headline amount because of the need to secure a top credit rating.
"Of course it also includes designing the rescue fund so that the EU share of 440 billion euros is actually available if needed," Schaeuble said.
Eurozone governments make their contribution to the bailout fund by guaranteeing bonds issued by the European Financial Stability Facility. The remaining 310 billion euros come from the European Commission and the International Monetary Fund.
However, to get a triple-A credit rating for EFSF bonds - and make them attractive to investors - governments had to guarantee 120 per cent of their value, while rescued countries have to deposit a certain portion of the loans they receive "as a cash buffer."
That takes the EFSF's lending capacity down to only about 250 billion euros, which many analysts say is insufficient if the EU had to bail out a country such as Spain.
