Eurozone finance ministers have agreed increase the bloc’s bailout fund to €700 billion (£586.7 billion).
A statement from the Economic and Financial Affairs Council explains that the European Stability Mechanism (ESM), which is scheduled to start in July, will open with its full €500 billion capacity.
This will be achieved by the €200 billion committed to the bailouts of Greece, Ireland and Portugal being set aside rather than being folded into the ESM as originally planned.
Finance ministers have also agreed for the €240 billion in unused funds held in the European Financial Stability Facility (EFSF) to be made available for bailouts in the transitional period when the ESM is being capitalised.
As the ESM is expected to have received all of its financing in the first half of 2014, the extra funds will be available for another two years.
The statement says the eurozone’s total fiscal firewall will amount to €800 billion. However, this includes the €49 billion already paid to Greece by the European Financial Stabilisation Mechanism and the €53 billion paid to the country in bilateral loans.
Earlier this week, Angel Gurría, secretary general of the Organisation for Economic Cooperation and Development, said eurozone bailout funds need to be increased to at least €1 trillion in order to restore market confidence.