Euro zone finance ministers struck a landmark deal to raise their debt firewall to €800 billion.
"All together, the euro area is mobilising an overall firewall of approximately €800 billion, more than $1 trillion," a joint statement from the 17 finance ministers said.
"Robust firewalls have been established and led to a significant improvement of market conditions," the statement added.
The headline figure, however, includes some €300 billion in loans already pledged.
The €800 billion is made up of €500 billion in the bloc's permanent ESM bail-out pot that comes into effect in July, plus €200 billion already pledged for crisis-hit countries, plus another €100 billion in bilateral and EU loans.
The euro zone's two bail-out funds, the ESM and a temporary pot called the EFSF, will run in parallel until mid-2013.
The paying-in of the ESM's cash element will be accelerated, with two slices paid in this year, two next year and a final tranche in 2014.
International Monetary Fund chief Christine Lagarde welcomed the expansion of the euro zone's firewall, calling it a critical step toward ending the region's financial crisis.
"The IMF has long emphasised that enhanced European and global firewalls, together with the implementation of strong policy frameworks, are critical for ending the crisis and securing international financial stability," she said in a statement.
Row marred euro firewall deal
But the deal was accompanied by a row between Austrian Finance Minister Maria Fekter and the head of the euro zone, Luxembourg Prime Minister Jean-Claude Juncker after the former leaked news of the deal to reporters. This resulted in Juncker cancelling a planned press conference.
As a result the meeting ended early and the decision of who will be the next chairman of the powerful Eurogroup and who will take up an executive board seat on the European Central Bank wasn't discussed.
Mr Juncker was not present at a later, larger meeting of European Union finance ministers when it started.
It means a delay in knowing whether Luxembourger Yves Mersch will take a seat on the ECB Bank board and who will succeed Juncker if he does.
The final headline figure matched a pledge made yesterday by the finance minister of Germany, Europe's top economy and paymaster, Wolfgang Schaeuble. "It's convincing, it's sufficient," said Schaeuble at the time.
Finance Minister Michael Noonan told reporters on the way into the meeting: "The market reaction to these is to the dollar amounts. So anything that gets you to a trillion dollars looks like a serious firewall and if you're talking €800 billion, its over $1 trillion and that is a very serious firewall," he said.
Euro zone ministers are under huge international pressure to build a convincing firewall. The European Union's partners from Washington to Tokyo, including the International Monetary Fund, want to see the euro zone ring-fenced for good to prevent a new crisis that could harm the world economy.
The Organisation for Economic Cooperation and Development (OECD) pressed this week for a €1 trillion pot, which OECD head Angel Gurria calls "the mother of all firewalls."
And leading and emerging nations of the G20 have said they will only consider lending more to the IMF to combat the euro zone crisis if the bloc first stumps up enough cash to tackle their own problems.
Highlighting the main reason to bolster the firewall - fears that the sovereign debt crisis that started in Greece could spread to larger economies such as Italy and Spain - were fresh concerns about Spanish fiscal strains.
Hours after a general strike, which burst into violence in places, Spain's right-leaning government was poised to unveil huge cuts today to meet European rules.
Unions said nearly a million people took part in Madrid alone to denounce labour reforms, spending cuts and soaring unemployment in a country mired in recession. The interior ministry put turnout in Madrid at just 85,000.
"Spain is in a very difficult situation," said EU Economic Affairs Commissioner Olli Rehn, adding that Madrid had the strength to fix its fiscal position. Spanish borrowing costs have risen in recent weeks after Madrid admitted it had missed its 2011 deficit target of 6% of gross domestic product, reporting 8.5% instead.
The final firewall figure agreed on was, however, short of what some - including the European Commission and France - had demanded. Many called for combining the zone's two rescue funds to create a total firewall of €940 billion.
But Germany, facing domestic public opposition to paying in more to what some Germans see as a "bottomless pit" in the euro zone, rejected this solution.
Ministers will now tackle other thorny issues, including appointing a new member of the six-member Executive Board of the European Central Bank. The head of Luxembourg's central bank, Yves Mersch, is favourite to get the nod, but the decision may yet be delayed until until the French election on May 6.
ECB has not closed the door on Irish debt solutions
Minister for Finance Michael Noonan has said the ECB has not closed the door to an overall re-engineering of the Irish bank debt.
In a statement last night the ECB said had "noted" the promissory note payment deferral, and added that it expected Ireland to stick to the promissory note repayment schedule which the Irish authorities had signed up to.
He said there was nothing in the statement which upset the Irish authorities. "It was a very matter of fact statement," he said. "It was what we expected."
He said the ECB was aware that the EU and IMF were preparing a policy paper to explore an alternative to the promissory note to give Ireland a less onerous method of repayment.
He said the promissory notes arrangement was complicated because it was "of their nature." In the Irish interest this is a very good arrangement, he said.
