ECB head calls for bailout boost

European finance ministers have been urged to approve an increase in the size of the eurozone's emergency "firewall" when they meet in Copenhagen today.

Peter Praet, head of the European Central Bank's economics portfolio, has prepared a document for the meeting that calls on ministers to combine the lending capacity of the existing €440bn European Financial Stability Facility and the incoming €500bn European Stability Mechanism.

The ESM was supposed to replace the EFSF when it is introduced this July, but the suggestion is now that the two should run concurrently, creating a potential bailout fund worth €940bn. The European Central Bank has calmed financial markets by injecting close to €1 trillion in cheap loans into the European banking system in recent months, but Mr Praet said the sovereign debt crisis could only be solved through action by national governments.

EU officials have suggested that a plan to combine the funds will demonstrate the eurozone is taking serious action to solve its problems. The hope is that the enlarged pot will tempt investors to buy the debt of states such as Spain and Italy.