Wall Street Journal
September 26, 2011
Many euro-zone leaders say they are willing to consider the idea of boosting the firepower of their bailout fund, but they haven't agreed on whether to move forward, in part because they aren't sure how they can do it.
At the International Monetary Fund gathering in Washington, in recent days officials from the U.S. and other major economies have urged the euro zone to leverage its bailout fund—by letting it borrow money more flexibly—to bolster investor confidence in Europe's bond markets and banks.
The bailout fund, called the European Financial Stability Facility, or EFSF, is widely seen as too small to intervene credibly in bond markets.
"Anything that's clearly finite and not very big is a sitting duck for the hedge funds," says one Berlin official.
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