Eurogroup chief Jean-Claude Juncker said the currency zone was ready to act with the European Central Bank and activate the bailout fund, in an interview to French newspaper Le Figaro published on Sunday.
“We have come to a crucial point. But we have to outline the pace and scope. We will act together with the ECB…” he said, speaking of the European Financial Stability Facility (EFSF) bailout fund.
“There is no more time to lose,” he said, adding that a review of the markets will be decided in the coming days.
ECB chief Mario Draghi sent stock markets soaring and helped bring down Spanish borrowing costs sharply last week by saying the central bank was “ready to do whatever it takes to preserve the euro. And believe me it will be enough.”
Since the start of the crisis, the ECB lost no time in embarking on a series of emergency measures – in addition to cutting rates – to stem the turmoil.
The EFSF rescue fund currently has a little more than 200 billion euros ($245 billion) to spend, not enough to fly to the rescue of Italy should it need a full-blown Greece-style rescue, but sufficient to have an impact on the market.
Though the fund is also able to buy public debt on the secondary market, it has never yet used that power.
Current rules state the EFSF can intervene on primary markets only for countries that have signed up to an official reform programme in exchange for a financial rescue, such as Greece or Portugal.
The EFSF can also offer credit lines as a precautionary measure or loan money to recapitalise banks.
At the last European Union summit in June, the bloc agreed that the EFSF could recapitalise banks directly, rather than by channelling funds through government, which just adds to their pile of national debt.