The mass debt downgrade of eurozone nations has reignited a debate over boosting the bloc's bailout fund, but governments are divided over raising their contributions, a senior EU official says.
"There is a debate. The question is still open and there is no consensus so far," the official told AFP on Sunday.
German Chancellor Angela Merkel, whose country was spared by the Standard & Poor's action, refuses to increase Berlin's share in the European Financial Stability Facility (EFSF).
Germany, Europe's top economy, is already the EFSF's main guarantor, which began with 440 billion euros ($A548 billion) but has 250 billion euros left following rescues of Portugal and Ireland.
The fund is now considered too small to come to the aid of Italy or Spain, the eurozone's third and fourth economies, which are in trouble, while Greece is awaiting a second bailout.
The S&P decisions to downgrade nine eurozone nations late on Friday, notably stripping France and Austria of their stellar triple-A ratings, could hit the EFSF's own credit score.
"If nothing is down to compensate (for the French and Austrian downgrades), the EFSF will lose its triple-A for long-term borrowings," the EU official said.
The US-based ratings agency had warned last month that any downgrade of one of the six AAA nations could lead to a similar cut for the EFSF. The downgrade left four AAA nations in the eurozone: Finland, Germany, Luxembourg and the Netherlands.
The EFSF is backed by guarantees from eurozone states, allowing the fund to borrow money from investors at cheap rates and then lend that money to nations that have been shut out of the private markets.
A downgrade would likely raise the interest rate demanded by investors to buy EFSF bonds.
Eurozone finance ministers, in a statement after the S&P announcement on Friday, pledged "their determination to explore the options for maintaining the EFSF's AAA rating".
One option, the EU official said, would ask the four countries that are still AAA to increase their guarantees to replace the two that lost their top rating.
"This poses political problems," the official said.
The second option requires increasing the EFSF's "cash buffer".
This would require the fund to borrow more than it needs during bond auctions in order to reinvest the surplus in AAA bonds, making up for the French and Austrian downgrades.
In both cases, governments would have to ramp up their contributions, but Merkel indicated on Saturday that a downgrade of the EFSF would not change Germany's contribution.
The downgrades "will not torpedo the work of the EFSF and I do not see the need to change anything" about the fund, she said.
A permanent fund, the European Stability Mechanism (ESM), is due to begin operating in July. It will run in parallel with the EFSF, a temporary instrument, for one year.
The combined capacity of both funds is supposed to be capped at 500 billion euros, but several countries, the European Central Bank and the European Commission want it to be bigger.
The ESM's firepower will be discussed at a March summit.
"A number of political leaders want to discuss the issue rapidly," the EU source said.
