Sources have told RTÉ News that tomorrow's planned meeting of EU finance ministers has been postponed until after the summit meeting in Brussels tomorrow night.
It is understood that finance ministers and officials need more time to work out the details of what will be agreed by euro zone heads of government at their summit meeting in Brussels.
Euro zone leaders are expected to announce plans to boost the firepower of the EU's bail-out mechanism - the EFSF - through the combined use of two schemes.
Under one, the issue of sovereign bonds will be partly insured, while a second scheme will involve the International Monetary Fund, through a so-called Special Purpose Vehicle.
Leaders are also expected to announce the losses which are to be imposed on holders of Greek sovereign debt as part of the renegotiation of Greece's second rescue package. The losses will be much deeper than those announced at a summit on July 21.
The debt write down is expected to be between 50% and 60% compared with a 21% haircut last July.
The insurance option - known as a credit enhancement - means that the EFSF will be able to insure between 20% and 30% of a bond issue as a way to keep borrowing costs down for countries like Spain and Italy.
It will be complemented by an SPV which will allow the IMF to mobilise the resources of private investors, sovereign wealth funds and emerging economies like China and Brazil.
Officials are said to be working out the legalities of the two schemes and trying to avoid pitfalls.
One such problem could be that insuring a portion of a debt issue could be seen as preferential treatment for a particular class of bondholders at the expense of other categories.
Another problem could be that a country which avails of the credit enhancement could find that availing of the scheme could technically add to its debt level. The EU's statistics arm Eurostat is understood to be examining the implications of the mechanism.
Combined, both schemes could increase the EFSF's firepower to well over €1 trillion from its current spending capacity of €440 billion.
Merkel's warning on ECB stance
Meanwhile, German Chancellor Angela Merkel has warned European Union governments against compromising the independence of the European Central Bank.
European leaders were scheduled tomorrow to announce a plan to boost confidence in the euro zone after months of indecision and uncertainty that have sparked sharp criticism from other global powers. The deal must prevent a fully-blown Greek default and limit contagion within the euro zone.
Merkel told reporters EU governments should not decide on ECB action. "We must not allow a misunderstanding, whereby politicians expect something from the ECB," Merkel said.
EU sources said she was referring to a phrase being discussed which would call for support for the continued use of non-standard measures - such as the purchase of Italian and Spanish bonds - by the ECB.
Meanwhile, Greek Prime Minister George Papandreou said today that Europe "must rise to the occasion" and banks must share the pain on ending the euro zone's sovereign debt crisis.
"Now is the hour for Europe itself to take the decisions to stop this crisis which creates insecurity among all European peoples," the Greek PM said.
A source close to the negotiations said the EU has asked banks to agree a 60% write-down on their Greek debt holdings.
An earlier EU plan in July only called for a 21% cut in Greek debt held by private creditors, who were to exchange maturing Greek government bonds with longer-term instruments. Papandreou insisted today that banks be part of the solution.
"We must all contribute. And I also mean banks, we want them to be restored to health and finally invest in the real economy, they must bear part of this major problem, the burden must be shared equally," the PM said.
Greece "out of bond markets for a decade"
The Taoiseach has said any decisions taken at the Brussels summit of EU leaders cannot be taken in isolation.
Enda Kenny was responding to Fianna Fáil leader Micheál Martin. who asked the Taoiseach if restructuring bondholder debt would be on the table. He said it would be on the agenda for Greek restructuring and that this was an opportunity for us to do the same.
Mr Martin criticised the lack of detail coming form the Taoiseach on what would be on the agenda at the summit.
Mr Kenny said the Greeks would end up paying dearly for their restructuring with severe austerity, and they may not be able to return to the bond markets for the next decade.
Sinn Féin leader Gerry Adams asked why it was acceptable to write down Greek debt while Irish taxpayers were paying bondholders here at the expense of social services.
