The euro zone decided Monday night to double the firepower of its future fund to support countries in trouble, trying to reassure markets on its ability to respond to debt crises when fears resurface. "We've agreed to provide an amount in respect of the lending capacity of 500 billion, which will be subject to regular review at least every two years," he told reporters the leader of Ministers finances in the euro zone, Jean-Claude Juncker after a meeting of central bankers in Europe to Brussels.
The proposed mechanism of financial support for the euro area is expected to see the day from mid-2013, replacing the current temporary arrangement, called facilitated European Financial Stability (FESF) and established in May 2010 following the debt crisis in Greece. The latter has on paper of 440 billion euros in guarantees for states in the euro area.
But in reality, it only has about 250 billion euros, the rest being set aside for loan terms attractive. The Europeans also want to increase to 440 billion euros its ability to lend effectively. From this point of view, the decision Monday night to the proposed mechanism is a clear sign of their willingness to do so.
The $ 500 billion is an amount that Ministers were "reasonable" in response, said the French economy minister Christine Lagarde. "We remain ready to take even the very short term all necessary measures to ensure the stability of the area," said Mr. Juncker. Germany, however, conditioned its aid to countries in difficulty to a very significant improvement of the common discipline, in terms of fiscal discipline and structural reforms.
It proposed with France a "pact" of competitiveness, which remains hotly contested. Many see it as a "diktat" from Berlin to impose its model for others. This will be the challenge of the negotiations that must take place to a European Union summit in late March, where a "global response" to crises in the euro zone must be adopted.
"There is no agreement until there is no agreement on everything," Juncker warned. The European central bankers wanted to send an immediate signal to the markets Monday, as the horizon darkens again after a lull since the bailout given to Ireland in late 2010. Bond yields Portuguese to ten years have reached approximately 7.63% up Monday against 7.175% Friday.
In their wake, Spanish and Irish rates have climbed. "The situation in the bond markets remains a concern," agreed Mr Juncker. Portugal, has long been considered a potential candidate for a financial rescue plan, once again giving signs of weakness. Its economy contracted in the last quarter of 2010, 0.3% from the previous because of the recessionary effects of the austerity measures implemented by the Socialist government to reduce public deficits.
Markets are also concerned about the time taken by European countries to finalize their system for crisis management, as well as by the differences they display. They fear that the financial safety net currently available is not sufficient to respond to crises in Portugal and Spain, or Italy or Belgium. 
The proposed mechanism of financial support for the euro area is expected to see the day from mid-2013, replacing the current temporary arrangement, called facilitated European Financial Stability (FESF) and established in May 2010 following the debt crisis in Greece. The latter has on paper of 440 billion euros in guarantees for states in the euro area.
But in reality, it only has about 250 billion euros, the rest being set aside for loan terms attractive. The Europeans also want to increase to 440 billion euros its ability to lend effectively. From this point of view, the decision Monday night to the proposed mechanism is a clear sign of their willingness to do so.
The $ 500 billion is an amount that Ministers were "reasonable" in response, said the French economy minister Christine Lagarde. "We remain ready to take even the very short term all necessary measures to ensure the stability of the area," said Mr. Juncker. Germany, however, conditioned its aid to countries in difficulty to a very significant improvement of the common discipline, in terms of fiscal discipline and structural reforms.
It proposed with France a "pact" of competitiveness, which remains hotly contested. Many see it as a "diktat" from Berlin to impose its model for others. This will be the challenge of the negotiations that must take place to a European Union summit in late March, where a "global response" to crises in the euro zone must be adopted.
"There is no agreement until there is no agreement on everything," Juncker warned. The European central bankers wanted to send an immediate signal to the markets Monday, as the horizon darkens again after a lull since the bailout given to Ireland in late 2010. Bond yields Portuguese to ten years have reached approximately 7.63% up Monday against 7.175% Friday.
In their wake, Spanish and Irish rates have climbed. "The situation in the bond markets remains a concern," agreed Mr Juncker. Portugal, has long been considered a potential candidate for a financial rescue plan, once again giving signs of weakness. Its economy contracted in the last quarter of 2010, 0.3% from the previous because of the recessionary effects of the austerity measures implemented by the Socialist government to reduce public deficits.
Markets are also concerned about the time taken by European countries to finalize their system for crisis management, as well as by the differences they display. They fear that the financial safety net currently available is not sufficient to respond to crises in Portugal and Spain, or Italy or Belgium.
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