EU in talks for a 1.5 tn euro crisis fund: Belgium

13th January 2011, Comments 0 comments

The European Union is in talks to double the eurozone debt crisis fund to 1.5 trillion euros (two trillion dollars), Belgian Finance Minister Didier Reynders told AFP on Thursday.

"I think that doubling the resources would be a reasonable objective," Reynders said in a telephone interview, adding that talks were ongoing.

"It must be noted that this does not mean taking money out of our budgets, these are guarantees that we are giving," he said.

Europe, with the backing of the International Monetary Fund, created last year a 750-billion-euro financial backstop to rescue any country in trouble in the wake of a massive bailout of Greece.

Europeans are debating whether to boost the size of the fund to appease markets nervous about the financial health of Portugal and Spain, after Ireland became the second eurozone country to get a bailout in December.

Eurozone countries provide guarantees of up to 440 billion euros for loans to countries that request aid within the European Financial Stability Facility (EFSF).

The IMF contributes another 250 billion euros and the entire EU can borrow another 60 billion euros through a separate vehicle.

EU leaders agreed last year to create a permanent crisis mechanism that would replace the EFSF when it expires in 2013.

"I think we should double the current facility and the future permanent mechanism. It would be the logical thing to do," Reynders said.

© 2011 AFP

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