COPENHAGEN, Denmark - The 17 countries that use the euro have boosted their emergency funding for debt-troubled countries to $1.1 trillion - an amount that falls short of what the currency union's international partners had said was needed to calm financial markets.
Of the 800 billion euros, which eurozone finance ministers agreed to Friday at a meeting in Copenhagen, only about 500 billion ($670 billion) is actually still available. About 300 billion euros ($400 billion) in loans have already been used to bail out Greece, Ireland, and Portugal.
The International Monetary Fund and others have been calling for a financial "firewall" of more than $1.3 trillion - just in case the vulnerable economies of Spain and Italy needed assistance. On Friday, IMF managing director Christine Lagarde congratulated European leaders on their agreement, but didn't say whether it went far enough to guarantee additional help from the IMF.
"I welcome the decision of Euro Area Ministers to strengthen the European firewall," Lagarde said in a statement. "The IMF has long emphasized that enhanced European and global firewalls, together with the implementation of strong policy frameworks, are critical for ending the crisis and securing international financial stability."
Many economists, as well as non-European countries like the United States and China, fear that further trouble in Europe could smother a burgeoning economic recovery in other parts of the world. Together, Italy and Spain hold more than 2.5 trillion euros in debt, and a default, or even the serious threat of a default, could pummel banks across Europe and spread panic on global markets.
But putting up large amounts to save some of its members is not an easy task for the eurozone. Rich countries like Germany and Finland face rising opposition against bailouts among their voters, while the finances of many other states are already overstretched.
Even reaching the overall 800-billion-euro capacity required a complicated patchwork of several old and new funds and loan programs. Ministers struggled to add up old commitments to reach a large figure to impress markets - only to quickly explain its components to calm down voters worried about their tax money.
Of the new total, only 500 billion euros is fresh money and will have to be built up and cobbled together over time, as the eurozone moves from its interim bailout fund, the European Financial Stability Facility, to its new rescue vehicle, the European Stability Mechanism.
Analysts said the agreement didn't come as much as a surprise, as it was closely modeled on a proposal made earlier this week by Europe's largest economy. "Today's decision is a classical European compromise," said Carsten Brzeski, senior economist at ING. "It was as far as the German government was willing to go, and it was the minimum most other eurozone countries were expecting."