Brussels — Eurozone ministers sent Greece an 8 billion euro, or $10.7 billion, Christmas rescue package Tuesday to stem an immediate cash crisis yet failed to resolve fears that the common euro currency might be doomed.
Stock markets around the world rose earlier in the day, hoping that intense pressure from the bond markets would finally force the 17-nation eurozone into quicker and more robust action.
But even as Italy’s borrowing costs skyrocketed to a euro-era record, the 17 finance ministers only found a veneer of credibility to coat the euro’s rescue fund with more leverage. They failed to increase the bailout fund to match earlier predictions and kicked other major financial issues — like a closer fiscal union — over to their bosses, the EU leaders meeting next week in Brussels.
The ministers did agree to use the fund to offer financial protection of 20 to 30 percent to investors who bought new bonds of troubled eurozone nations, an effort to help those countries get back to borrowing on global markets again.
“We made important progress on a number of fronts,” Jean-Claude Juncker, the eurozone chief, insisted late Tuesday. “This shows our complete determination to do whatever it takes to safeguard the financial stability of the euro.”
EU Monetary Chief Olli Rehn said eurozone nations needed to work on many financial issues at once to ease global pressure on their currency.
“There is no one single silver bullet that will get us out of this crisis,” Rehn told reporters.
But the question of how to beef up the leverage capacity of European Financial Stability Facility from its current 440 billion euros, or $587 billion, to a hoped-for 1 trillion euros, or $1.3 trillion, was not resolved. The fund is supposed to be a firewall that protects European nations from the financial chaos of their neighbors.
Fund chief Klaus Regling remained vague on how beefed up it was after Tuesday’s meeting in Brussels, but assured reporters it was more than big enough to deal with Europe’s immediate financial debt problems.
“To be clear, we do not expect investors to commit large amounts of money during the next few days or weeks,” Regling said. “Leverage is a process over time.”
Dutch Finance Minister Jan Kees de Jager said investors had appeared less eager than originally anticipated.
“It will be very difficult to reach something in the region of a trillion. Maybe half of that,” he said.
Italy remained an enormous concern. Carrying five times as much debt as Greece, Italy was battered for the third straight day in the bond markets, seeing its borrowing rates soar to unsustainable levels of 7.56 percent. Investors appear increasingly wary of the country’s chances of avoiding default — and making matters worse, the eurozone’s third largest economy is deemed too big for Europe to bail out.
The ministers still insisted Italy’s new prime minister would come through, saying he has promised to balance Italy’s budget by 2013.
“We have full confidence that Mario Monti will be able to deliver this program,” Juncker said.