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Business

Eurozone seeks to quadruple rescue fund firepower

The eurozone is looking to increase its permanent rescue fund to about 2 trillion euros ($2.58 trillion), according to German media reports. European ministers want to use private capital to reach the formidable target.

The member states of the single currency are making preparations to allow the European Stability Mechanism (ESM) to leverage its capital in the same way as its European Financial Stability Facility (EFSF) predecessor, German newsmagazine "Spiegel" wrote Monday.

Spiegel said eurozone finance ministers had reiterated at their meeting in Cyprus earlier this month that the ESM should be allowed to use this method to increase the rescue fund's planned lending power of 500 billion euros ($647 billion) to about 2 trillion euros with the help of private investors.

While German Finance Minister Wolfgang Schäuble was supporting the plan, Finland had voiced their opposition to it, Spiegel wrote. Germany's liability under the ESM would remain capped at 190 billion euros, the news magazine added.

German opposition parties on Monday demanded that the leverage mechanism should be subject to a new vote in parliament, as it would pose higher risks for the German taxpayer.

In a ruling earlier this month, Germany's Constitutional Court made consulting the parliament on any changes to the ESM a condition for giving its approval to the rescue fund's ratification.

The ESM is expected to come into force on October 8, and will succeed the EFSF as the eurozone's permanent financial rescue fund. It is intended that the fund will be able to bail out Europe's larger economies, such as Spain and Italy, should that become necessary.

uhe/sej (Reuters, dapd, dpa)