EUROPEAN CENTRAL Bank President Jean-Claude Trichet said governments could empower the euro zone’s bailout fund to buy bonds, a step that would take pressure off the ECB’s efforts to fight the sovereign-debt crisis.

“There are a number of tools they can use and I would certainly not exclude that one, which I would consider useful in certain circumstances,” Mr Trichet said in an interview in Davos yesterday.

European leaders are scrambling to retool the €440 billion European Financial Stability Facility before a leaders’ summit in March. Authorising the EFSF to buy government bonds is one option euro-area finance ministers are examining as part of efforts to bolster the zone’s financial buffer, Luxembourg’s prime minister Jean-Claude Juncker has said.

Mr Trichet is the fourth ECB official in the past two weeks to press governments to beef up the fund’s remit. The matter was the source of a “lively discussion” at dinner on Tuesday between German chancellor Angela Merkel and European Commission chief José Manuel Barroso, a spokesman for Dr Merkel said.

“There were perhaps differences of opinion about whether it is necessary to talk about it now,” the spokesman said. Mr Barroso infuriated Berlin earlier this month when he called publicly for the EFSF to be increased.

Separately, the EU’s Economic and Monetary Affairs Commissioner Olli Rehn has told a German newspaper that measures to bolster the rescue fund must include all member states and discourage markets from speculating against the euro.

Mr Rehn told Frankfurter Allgemeine Zeitung it was not yet clear how the EFSF should be beefed up without raising its nominal volume beyond the € 440 billion figure.

Mr Rehn also said he did not favour restructuring Greece’s debts because this would create even greater economic problems, adding that this would be avoided.

However, he conceded that markets were concerned about whether Greece would be able to redeem its bonds. “That’s why we’ve proposed to give Athens, like with Dublin, seven years to pay back its aid,” Mr Rehn said. – (Bloomberg, Reuters)