EU denies wanting to double size of rescue fund

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The European Commission denied reports Thursday that it proposed to double the size of a eurozone financial safety net to 880 billion euros (1.8 billion dollars) following the Irish fiscal crisis.

The German daily Die Welt reported that the European Union's executive arm wanted to pump more money into the 440-billion-euro European Financial Stability Facility, which was created to help any eurozone nation in trouble.

"It's false," European Commission economic affairs spokesman Amadeu Altafaj Tardio told AFP.

The newspaper, in article to appear in its Friday edition, said Germany had rejected the idea of doubling the fund's size.

The 16-nation eurozone decided to create the EFSF in May to prevent a new crisis after the Greek debt drama rocked the value of the bloc's common currency and triggered fears of contagion to other weak economies.

The mechanism is part of a wide programme that also includes 60 billion euros from the 27-nation European Union and another 250 billion euros from the IMF, bringing the total safety net to 750 billion euros.

Six months after the 110-billion-euro Greek bailout, Ireland is finalising an deal with the EU and IMF for loans expected to be worth around 85 billion euros after a banking crisis blew a huge hole in its budget.

The Irish crisis has fueled that Portugal and Spain could be next in line.

© 2010 AFP

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