Eurozone ministers try to beef up rescue fund
Eurozone ministers offered Greece an euro 8 billion ($10.7 billion) Christmas rescue package Tuesday to stem an immediate cash crisis yet failed to resolve fears that the common euro currency might be doomed.
The 17 finance ministers insisted they found a veneer of credibility to coat the euro's rescue fund with enough leverage to deal with potential financial crises much bigger than the one facing peripheral Greece. And they called on the International Monetary Fund for resources to help further protect Europe's embattled currency.
"We made important progress on a number of fronts," Jean-Claude Juncker, the eurozone chief, said late Tuesday.
After saying earlier that the eurozone's rescue fund would be able to leverage up to one euro1 trillion ($1.3 trillion), the fund's chief remained vague on how beefed up it was after Tuesday's meeting in Brussels. Klaus Regling said it would grow according to demands and market conditions, but assured reporters it was more than big enough to deal with Europe's immediate financial debt problems.
Still, making progress on the fund — a firewall to keep Europe's debt problems from engulfing nation after nation — "shows our complete determination to do whatever it takes to safeguard the financial stability of the euro," Juncker said.
Italy remained an enormous concern. Carrying five times as much debt as Greece, Italy was battered for the third straight day in the bond markets, seeing its borrowing rates soar to unsustainable levels of 7.56 percent. Investors appear increasingly wary of the country's chances of avoiding default — and making matters worse, the eurozone's third largest economy is deemed to big for Europe to bail out.
The ministers still insisted Italy's new prime minister would come through, saying he has promised to balance Italy's budget by 2013.
"We have full confidence that Mario Monti will be able to deliver this program," Juncker said.