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The European Stability Mechanism (ESM) would have two instruments like its predecessor, the European Financial Stability Facility (EFSF), that would only allow public money to be used for particularly risky transactions such as buying Spanish bonds, while private investors would provide the rest.
It had always been expected that the ESM, which is expected to come into force on October 8 with a capacity of €500 billion, would have the same leverage ability as the EFSF and eurozone finance ministers reiterated this at their meeting in Cyprus earlier this month.
If the ESM gets approval to use the same leverage techniques as the EFSF, it would have a lending power of around €2 trillion without countries having to contribute any more capital to the fund. But these leverage options have not been approved by all eurozone Member States and Finland is especially reluctant to agree to them. German Finance Minister Wolfgang Schäuble supports the plan but Finland is preventing the Eurogroup from passing it quickly.