Eurozone bail-out funds ‘enough’

The IMF’s Dominique Strauss-Kahn with the ECB’s Jean-Claude Trichet at the Eurogroup meeting

The eurozone’s financial safety net is large enough for now, a meeting of the group’s finance ministers has said.

After the meeting, the chairman of the Eurogroup countries, Jean-Claude Juncker, said the 750bn euro (£635bn, $1tn) backstop was the right size.

He told reporters: “For the time being, there is no need to increase.”

He also said that the issue of a eurozone-wide bond, as proposed by certain member states but opposed by Germany, was not discussed.

Fears have been growing that other countries will soon follow Greece and the Irish Republic and need financial backing, which could test the existing bail-out fund to its limits.

One suggestion was to increase the size of the fund itself, or to issue new bonds that would be issued jointly by governments and guaranteed by them all.

IMF chief Dominique Strauss-Kahn backed the suggestion that the 16-nation eurozone should boost the rescue fund.

But Germany’s Chancellor, Angela Merkel, dismissed both proposals on Monday.

Some countries have seen investors drive their borrowing costs so high that it has become very difficult to access much-needed funds on the open markets.

The Irish Republic will take further steps to address its economic problems with the announcement of new budget plans later on Tuesday.

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