BERLIN ? The eurozone bailout fund will see its firepower increased to more than euro1 trillion ($1.39 trillion) to enable it to contain the debt turmoil that threatens to rip apart the 17-nation eurozone, according to German lawmakers briefed Monday by Chancellor Angela Merkel.
Eurozone governments hope the euro440 billion ($600 billion) European Financial Stability Fund, or EFSF, will be able to protect countries like Italy and Spain from being engulfed in the debt crisis.
To do that, however, it needs to be bigger or see its lending powers magnified.
Frank-Walter Steinmeier, parliamentary leader of the opposition Social Democrats, and Greens leaders Cem Oezdemir and Juergen Trittin said the chancellor informed them that the EFSF's lending powers will be boosted significantly.
"There will be a leveraging of the EFSF. It is clear that this leveraging will be around a level beyond one billion (euro)," Trittin told reporters outside the chancellery in Berlin.
That would be achieved through a combination of measures. The fund would insure investors against a percentage of possible losses on eurozone government bonds and the plan also involves the participation of outside organizations such as sovereign wealth funds and the International Monetary Fund, Trittin said.
The chancellor briefed lawmakers on Monday about the progress of the eurozone rescue plans following the weekend's EU summit.
Because of the move's significance, members of Merkel's party proposed that the change receive full parliamentary approval on Wednesday ? although it would have been enough for the parliament's budget committee to approve the plan.
Volker Kauder, the parliamentary leader of Merkel's conservative bloc, said the decision to seek a vote was "nothing extraordinary" because "questions of fundamental significance must be decided in parliament."
Kauder stressed that Germany's liability won't be increased by beefing up the fund's firepower and that Berlin will still be guaranteeing loans to the tune of up to euro211 billion, and no more.
The vote will also provide "a great breadth of support to the chancellor in her negotiations," he told reporters.
German lawmakers are set to receive the detailed guidelines of the EFSF later Monday.
Parliament is then to sign off on the eurozone rescue plans and the EFSF's new powers before Merkel gives the final green light at a European Union summit in Brussels later Wednesday. The change looks likely to pass by a wide margin in parliament.
Beefing up the bailout fund is one part of a three-pronged eurozone plan to solve the crisis.
The other two parts are reducing Greece's debt burden so the country eventually can stand on its own and forcing banks to raise more money so they can take losses on the Greek debt and ride out the financial storm that will entail.
Getting Greece's private bondholders to take deeper losses to lighten the country's deb load is proving particularly difficult. Experts agree that Greece needs to write off more of its debt if it is ever to make it out of its debt hole. But many also say such a deal with private creditors needs to be voluntary. Imposing sharp losses against the banks' will could trigger massive bond insurance payments that could cause panic on financial markets.
While European governments finalize their comprehensive plan, the European Central Bank has been taking on the role of fire-fighter by buying the bonds of financially weakened governments on the open market. That keeps the bond prices up and the rates down, allowing the countries to borrow on financial markets at lower rates than they otherwise could.
The ECB said it bought euro4.5 billion ($6.3 billion) in government bonds last week. That was up from euro2.2 billion the week before, bringing the total of sovereign bonds held by the ECB to euro169.5 billion.
The ECB hopes it will be able to stop the bond-buying program once the bailout fund's new powers are active.
French Finance Minister Francois Baroin said France, in a bid to "avoid tensions," has agreed to abandon its push to turn the EFSF into a sort of bank that would give it access to the ECB's unlimited source of money. The idea clashes with German traditions of economic management and fears of printing money to pay for the governments' debt.
"We know that the Germans don't want this," Baroin said.
Differences between Germany and France have been blamed in part for the failure of talks last week and an EU summit Sunday to produce a comprehensive new plan to stem the eurozone's debt crisis.
Baroin also said that "budgetary and fiscal convergence" ? a sensitive topic for some governments that fear losing control of their own spending policies ? will be inevitable as a result of the debt crisis.
French President Nicolas Sarkozy and Merkel put public pressure on Italian premier Silvio Berlusconi in Brussels on Sunday to implement new reforms, arguing that Europe's new plan to fight the debt crisis would do no good if Rome doesn't boost market confidence in its own finances.
Italy is considered to be one of the next weakest links in the eurozone after the three countries already bailed out ? Greece, Ireland and Portugal.
Italy's Cabinet will meet later Monday to discuss the new growth measures that Berlusconi promised to his EU counterparts.
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Geir Moulson in Berlin and Angela Charlton in Paris contributed to this report.
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