Germany rejects calls to boost bailout fund

BERLIN/MADRID (Reuters) – Germany, the only major euro zone member to retain a top-notch credit rating, refused on Monday to consider boosting the bloc’s rescue fund, while Greece was under pressure to urgently break a deadlock in debt swap talks if it is to avoid an unruly default.

European leaders vowed to press ahead with a fiscal pact for stricter budget discipline and hasten the launch of a permanent bailout fund for the 17-nation euro area, the European Stability Mechanism, in the light of Standard & Poor’s move last Friday.

The downgrading of France, Austria, Italy and Spain in particular means the European Financial Stability Facility risks losing its AAA rating or having less money to lend, unless remaining triple-A nations raise their guarantees, euro zone officials said.

But German Chancellor Angela Merkel’s spokesman, Steffen Seibert told reporters: “The government has no reason to believe that the volume of guarantees that the EFSF has now should not be sufficient to fulfill its current obligations.