Talks on bolstering EU firewall in March

Europe will decide whether to bolster its firewall against the debt crisis "in the course of March," Germany's finance minister said yesterday, appearing to downplay the chances of a result at a coming EU summit.

"We explained to all our colleagues that we in Europe will take the decision in March, as the heads of state and government have decided," Wolfgang Schaeuble said on the sidelines of a meeting of G20 finance ministers and central bankers.

"But March goes from 1 to 31," he added. "Between March 1 and 31, we will again examine whether the volume of the mechanism is sufficient given recent developments."

EU leaders meet on March 1 and 2 in Brussels to debate whether to boost the size of the eurozone's firewall in an attempt to prevent the debt crisis spilling over.

Germany has indicated its opposition to the idea of combining the current bailout fund, the EFSF, with the permanent ESM fund due to come into effect in July, which would give the bloc a war chest of about à750-billion.

On Saturday, Schaeuble said it "doesn't make any economic sense to follow the calls . for endlessly pumping money into the rescue funds."

Top figures, including the head of the International Monetary Fund, the US treasury secretary and the finance ministers of the UK and Japan, have called on the eurozone to bolster its defences against a renewed flare-up of the debt crisis.

Schaeuble said a decision on a eurozone firewall in March would be "timely" given that the IMF was likely to take a decision on boosting its own resources in April.

Several non-European nations have hinted that they would be prepared to plough more money into the IMF to fight the eurozone crisis, but only if the Europeans first pledged to put in more cash.

Brazil's finance minister, Guido Mantega, said at the weekend that emerging countries would also be prepared to help Europe if the eurozone first increased its own firewall and allowed developing countries more say at the IMF.