Eurozone ministers will take "a convincing decision" this week on the reinforcement of financial firewalls designed to guard against future risks to the region, EU economic and monetary affairs commissioner Olli Rehn predicted yesterday.
Eurozone finance ministers will gather in Copenhagen on Thursday and Friday to continue talks aimed at establishing the size of a massive bailout fund that could combine the European Financial Stability Facility (EFSF), which is due to expire next year, and the system designed to replace it, the European Stability Mechanism (ESM).
The EFSF, which has a total of €500bn in funds, has so far disbursed €192bn in three bailouts to Ireland, Greece and Portugal. Under the current rules, the unused funds would be passed on to the ESM.
Policymakers are discussing how to add to the funds. Under the least ambitious option, the ESM would be allowed to start afresh with its entire half-trillion euro capacity available for future use.
The EFSF would continue to administer the programmes in progress, while its unused capacity would no longer be available. That would bring the total crisis backstop to almost €700bn.
"Luckily, the economic situation is a little bit better than just a few months ago," Finnish Prime Minister Jyrki Katainen said yesterday at an economic brainstorming seminar attended by Mr Rehn.
The ECB stepped in to quell the acute financial crisis by lending banks about €1trn for three years since December and by keeping its benchmark interest rate at a record-low of 1pc. It has also bought bonds of countries whose yields rose last year.
The ECB "has played a key role," Mr Rehn said. The lending helped "prevent a credit crunch" and improved financing conditions for European businesses and households, he claimed.
ECB council member Joerg Asmussen said the region's governments must make use of the calm period in the markets created by the central bank's three-year loans.
"All countries of the eurozone have to do their homework," Mr Asmussen said. "They have to do "structural reforms, create jobs. This is true for all countries".
"Even if this crisis is a little bit calmer, we still think it is necessary to increase the European firewalls," he added.
Germany has resisted calls for a bigger bailout fund, but EU officials are hopeful it will be persuaded to back the plans.
The European Commission is also hopeful that securing agreement this week for a larger fund will encourage countries including China and the US to stump up more money for the IMF.
Yesterday in Finland, Spain's minister for European affairs said the Iberian country would reach the target of reducing its budget deficit to 3pc of gross domestic product next year.
"We're going to do it," said Inigo Mendez de Vigo.
"We're on the way and we're serious. We're going to give our word."
Mr Rehn said he was "fully confident" Spain would meet the fiscal target in 2013.