European fund bond buy back 'possible': Germany

(BERLIN) - Germany suggested on Wednesday it was "possible" for the European Financial Stability Fund (EFSF) to buy back the bonds of a country in financial trouble.

"It is already now theoretically possible for a state to receive financial aid and then to use some of this to buy back its debt," finance ministry spokesman Martin Kotthaus told a news conference.

European Investment Bank (EIB) chairman Philippe Maystadt said on Tuesday the eurozone planned to relieve Greece's debt mountain by buying back Greek bonds at going rates on the secondary market.

Speaking on the Belgian RTL-TVI network, Maystadt, who took part in an EU finance ministers meeting in Brussels, said "measures must be taken to make Greece's debt sustainable."

"There is a proposal which is backed by the European Central Bank (ECB), by the European Commission, and which we are going to discuss, which would consist in enabling the European Financial Stability Fund (EFSF) to buy back Greek bonds at market rates," he said.

Eurozone finance ministers on Monday agreed to beef up the size and scope of the EFSF, a rescue fund set up in the aftermath of last year's 110-billion-euro Greek bailout which has a current lending capacity of 440 billion euros ($620 billion).