“We are thinking about the possibility of giving the EFSF (European Financial Stability Facility) greater leverage, to give it greater strength,” Rehn told Die Welt.

Expressing concern over the financial strength of eurozone banks, he said: “The current crisis is a serious combination of a crisis in public debt and weaknesses in the financial sector. We cannot solve one without the other.”

“We need to shore up repair work in the financial sector with a recapitalization of the banks,” he said.

The EFSF was established last year to help shore up debt-ridden countries. Its role is shortly to be expanded in line with measures agreed by eurozone leaders in July, but parliaments in the 17-member bloc must approve the measure and their agreement is by no means certain.

The eurozone had previously agreed to increase the EFSF’s lending capacity to 440 billion euros ($591 billion), but Rehn did give any figures on an enlarged stabilization fund.

Despite a massive EU-IMF bail-out, there is growing concern about the possibility that Greece might default on its debt. Since the July meeting, Italy’s financial problems have also increased.

Last Tuesday, Standard & Poor’s ratings agency lowered its credit rating level for Italy, arguing that a weak coalition was trying to govern an economy with poor growth prospects.

Two days later the finance ministry lowered its growth forecast sharply. Eurozone finance ministers are due to meet in Luxembourg on October 3.

AFP/bk