Talks on euro fund have two options: German source

21st October 2011, Comments 0 comments

Talks on beefing up the eurozone bailout fund revolve around two options -- a system of partially insuring debt and a bigger role for the International Monetary Fund, a German government source said Friday.

Currently "there are two ways we are thinking about," the source said, pointing to "the partial insurance of newly issued bonds" by struggling eurozone countries and "how to arrive at new possibilities of cooperation with the IMF.

"These are the two most promising variations," the source said.

European countries are intensively discussing options for increasing the firepower of the 440-billion-euro (605-billion-dollar) European Financial Stability Facility, set up last year.

Under the first option, the EFSF would guarantee a part of the bonds issued by heavily-indebted countries, encouraging investors to buy them and so allowing such eurozone states to still access funding.

The International Monetary Fund is actively involved in European rescue efforts, having helped bail out Greece and then Ireland in 2010, followed by Portugal early this year.

© 2011 AFP

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