Europe considering boosting euro bail-out fund

Increasing the size of a eurozone bail-out fund is "one option" being considered by governments, France's economy minister, Christine Lagarde, has said.

Ministers were also looking at extending the fund's scope to buy bonds directly on markets, she added.
Her comments follow suggestions from other senior European officials who feel the rescue fund is not big enough.
Opponents say increasing it would encourage economic laxity.
The 440bn-euro ($571bn; £366bn) European Financial Stability Facility (EFSF) was set up in May last year to try to protect the eurozone by rescuing troubled member states.
It is financed by the eurozone members themselves and has been used to support the Republic of Ireland. Some think it is only a matter of time before Portugal and Spain need similar help.
But while the current guarantees would be enough to support Portugal, there are fears that bailing out Spain would require further funding.
Greece, the Republic of Ireland and Portugal each account for about 2% of the eurozone economy, whereas Spain makes up about 10%.
'Moral Hazard' 

• Formed in May 2010
• Worth 440bn euros
• Aims to preserve the stability of the eurozone by rescuing troubled members
• It raises funds by issuing bonds - these are then guaranteed by eurozone countries up to agreed limits
• Germany has pledged the most: 119bn euros
• Part of a 750bn-euro safety net which also includes European Commission and IMF funds

However proposals to set aside more funds to help out in any future crisis have garnered some opposition, most notably from Germany.

Some believe such a step would lead to it will lead to "moral hazard" - where if a country knew there was a cushion waiting, it would not fight as hard to stay solvent as it would have done had it thought it would hit hard ground.
Germany in particular will have difficulty signing up to further support as some German taxpayers already feel their prudence is being squandered on helping more feckless nations.
There are seven key elections in the country next year and the German chancellor, Angela Merkel, as part of a coalition government, has not got the comfort of a solid majority for her party.
Finance ministers from the 17-nation eurozone area will have the opportunity to discuss the issue on Monday when they hold their regular monthly meeting in Brussels.
'One option' Ms Lagarde said European finance ministers had to submit options to a European Council meeting in March and these could include whether European stabilisation funds should be allowed to buy a country's bonds - known as sovereign debt - on the secondary market.
"The increase in the EFSF is one option which we are looking at, of course," she told a news conference.
The German finance minister, Wolfgang Schaeuble, said on Thursday that talking about expanding the rescue fund was not realistic.
Fears about the need for any future bail-outs have ebbed this week after both Portugal and Spain raised money at lower interest rates than had been feared - a sign of improving investor confidence.