ECOFIN COUNCIL : RESCUE FUND TALKS TO DOMINATE EUROGROUP MEETING.

 
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Eurozone finance ministers are to meet, on 17 January, after a turbulent week in which it was revealed that the bloc is working on boosting the size and mandate of the 440 billion European Financial Stability Facility. While official sources attempt to dampen expectations that any decisions on the fund will emerge from the talks, the Commission and the European Central Bank have both upped the pressure on EU governments to come up with a solution to dampen market speculation that the current size of the pot is not enough. Commission chief Jose Manuel Barroso has said that a decision should be made no later than the next European Council - which is being held on 4 February and is dedicated to energy and innovation - while ECB President Jean-Claude Trichet said the fund should have "maximum flexibility" when doing its work.

French Finance Minister Christine Lagarde confirmed, on 14 January, that talks were ongoing on a "number of instruments," including additional money and allowing the fund to extend pre-emptive credit lines to buy up the bonds of troubled states. Belgian Finance Minister Didier Reynders wants to double the size of the joint EU-IMF mechanism, agreed in May last year, from its current 750 billion (which includes 250 billion in IMF commitments) to 1.5 trillion, but diplomatic sources have expressed scepticism at the figure and say that more detail is needed. German Finance Minister Wolfgang Schauble has come out against a financial boost for the fund, saying that it would send a signal to the markets that countries such as Portugal and Spain are on the cusp of tapping it. France is sympathetic to the German argument but insists it...

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