Debt-crisis fund is big enough for now, Europe’s leaders say
BRUSSELS — Top European officials insisted yesterday that they have enough financial firepower to deal with Europe’s government debt crisis — but did not rule out increasing Europe’s bailout fund in the future.
Jean-Claude Juncker, who chaired a meeting of the eurozone’s 16 finance ministers, said that there is no immediate need to increase the $1 trillion financial backstop, despite concerns it just isn’t enough.
The fund is for eurozone governments in danger of running out of money.
“For the time being, there’s no need to increase,’’ Juncker said after the meeting.
The big fear in the markets is that Portugal, and even more dangerously Spain, which is much bigger, will join Greece and Ireland in needing a financial lifeline — and that Europe might not have enough bailout money available to cope and keep countries that run into financial trouble from defaulting on their debts.
In May, eurozone governments and the International Monetary Fund set up the financial backstop for the currency bloc.
The majority is managed by the so-called European Financial Stability Facility, which can issue up to $584.79 billion in bonds guaranteed by eurozone governments.
The EU’s executive commission can lend an additional $79.7 billion, while the IMF has said it would contribute up to $332 billion.
The idea behind the facility was to reassure bond markets that countries would be able to pay — and halt the selloff of government bonds.
Klaus Regling, who heads the stability facility, said that Ireland’s $89.71 billion bailout agreed to last month will use up less than 10 percent of the total backstop.
“There are sufficient resources left to deal with other relevant cases,’’ Regling said.
Regling said funding was not proving to be an issue and said he was getting interest in the facility’s future bond issues from all around the world and from all types of investors, including central banks, sovereign wealth funds, and rich individuals.