The European Union's executive has called for greater emergency lending power to underpin the eurozone.
‘We are saying very clearly that we believe that the financing capacity must be reinforced and the scope of the activities of the (European Financial Stability Facility) should be widened,’ European Commission President Jose Manuel Barroso said today, calling for a summit decision next month.
But Germany and France said the €440bn backstop was sufficient. A spokesman for German Chancellor Angela Merkel said it was neither useful nor necessary to discuss expanding the EFSF.
Senior EU sources said Paris and Berlin were in fact working actively on a systemic response to the debt crisis, including a possible expansion of the EFSF, but the package is unlikely to be ready in time for the 4 February summit.
It is more likely to be adopted when EU leaders meet in late March.
Separately, the Commission suggested in an internal report seen by Reuters that a one-off tax could be levied on banks to raise €50bn to fund the future European Stability Mechanism designed to support eurozone states in trouble.
There has been no immediate response to the Commission's idea of raising a ‘critical mass of paid-in capital’ for the future ESM, but the main member states have long opposed any form of EU tax.
EU Monetary Affairs Commissioner Olli Rehn said work was in progress on raising the lending capacity of the existing rescue fund, which can effectively lend only €250bn because of cash buffers set aside to obtain a top-notch credit rating.
