The European Central Bank is pressing political leaders to boost the size of a fund created to preserve financial stability, two days ahead of a crucial European Union summit.
'We are calling for maximum flexibility, and I would say maximum capacity, quantitatively and qualitatively,' for the European Financial Stability Facility (EFSF), bank chairman Jean-Claude Trichet said last night in Frankfurt.
On Thursday and Friday, EU leaders are expected to approve a permanent euro zone crisis fund that Economics Affairs Commissioner Olli Rehn said will provide a 'systemic' response to the euro zone debt and deficit crisis.
Bond markets have targetted several weaker euro zone countries including Ireland and Portugal in the fallout from the Greek debt crisis in May.
The ECB has bought government bonds as borrowing rates for those members soared, marking another stage in the crisis, but raising questions as to how far it could go with this tactic.
Trichet said that 'crises of that amplitude call for all of us in Europe to reflect intensively on what should be done' and urged EU leaders to do more than they have offered to so far.
'We are not completely satisfied with the proposals put forward by the (EU) Commission and the European Council Task Force that should aim at strengthening the system of economic governance in Europe,' an ECB statement said.
In particular, deadlines for action by governments running excessive public deficits should be shortened and 'sanctions should be applied in a way that is quasi-automatic and based on clearly defined criteria,' it added.
EU politicians that are supposed to keep an eye on each others' finances have considerable say in such matters but have in the past been reticent to approve painful sanctions on each other. It has emerged that Greece, for example, joined the euro zone with bogus figures, and growth data since 2004 are still not considered final by the EU's Eurostat statistics service.
Trichet has called several times for governments to make a 'quantum leap' in governance in response to the crisis and said he believed they would rise to the challenge owing to pressure being brought by emerging economies.
'The changes I see in the rest of the world over the last 20 years are in my opinion confirming that the deepening of European unity is more justfied than ever,' he said.
Meanwhile, the ECB president reiterated the bank's opposition to a common euro zone bond as proposed by Luxembourg Prime Minister Jean-Claude Juncker.
The ECB has already 'said that it was not necesssarily appropriate to have such kind of bonds'. 'There is no new position of the governing council of the ECB on any new proposal,' Mr Tichet said.
'No consensus' on euro zone bond
The President of the European Commission has downplayed the prospects of the creation of a euro zone bond. Jose Manuel Barroso told MEPs that the EU's current measures to tackle the euro crisis were far from exhausted, and that it was best to avoid opening up another discussion on which there was no consensus.
The chairman of the euro zone finance ministers, Luxembourg Prime Minister Jean-Claude Juncker, has backed the creation of such a bond, which would reduce borrowing costs for some EU member states. But the idea has been rejected by both the French and German governments.
Jose Manuel Barroso added that he found the idea of such an instrument interesting and attractive. He said the idea should not be killed for the future, but argued that Europe should concentrate on what can be done quickly. He was criticised by the socialists for giving what they described as a very diplomatic answer.
