Finance Minister Tonio Fenech has reserved judgment on a proposal to increase the European stability fund to three trillion euro, insisting he preferred to see it in writing at next week's EU finance ministers' meeting.

The stability fund created by eurozone countries currently stands at €400 billion and Malta's share of guarantees amounts to around €400 million.

"The money being mentioned is not a small amount and we will have to make our own analysis on the contribution Malta will be expected to make when the proposal comes on the table," Mr Fenech said when visiting aviation company Medavia this morning.

The European Financial Stability Facility is being used to bail out Greece, Portugal and Ireland but it will not be able to cover the exposures of much larger economies like Spain and Italy if they go under. Analysts have argued for a much larger fund.

Another proposal has been for Greece to default on at least half of its debt to allow the country breathing space without having to impose more austerity measures that have stifled economic growth.

However, in next week's meeting Malta will insist on equal treatment among eurozone countries in view of Finland's insistence that it be given collateral in exchange for money loaned to Greece.

"Government is holding on to its position that if any country is given guarantees Malta will also be able to ask for collateral," Mr Fenech said.

He insisted the situation was "very serious" and the eurozone had to have the mechanisms in place remove the instability because the longer it lasted the bigger the risk of recession.

"The situation is precarious on a day-to-day basis and the international situation does not allow us to delay decisions," Mr Fenech said, admitting the discussion was complex and difficult.

He said Malta will also be suggesting that the stability facility be turned into a permanent institution on the lines of a European monetary fund to lower the exposures on member states if the fund has to increase.

See also: http://www.timesofmalta.com/articles/view/20110927/local/Eurozone-woes-A-singlecurrency-17-governments.386600