SINGAPORE: The eurozone will not break up despite the debt crisis sweeping the currency bloc, the chief executive of the European Union bailout fund said Tuesday.
Klaus Regling, head of the European Financial Stability Facility (EFSF), also said that a ratings downgrade by Standard and Poor's on Monday will have limited impact on the fund.
"The euro will not break up. (The) economic costs of that will be very high," Regling told reporters in Singapore, adding that investors' fears over such a development were "unfounded".
"No country will be forced to leave the euro area," he said at a news conference after meeting with government officials and major investors in the wealthy city-state.
"That's clearly not a policy objective. We are family and no family member is forced out as a policy objective," he added.
"If things go terribly wrong it might happen but it's not something that is actively pursued by anybody with something to say in the euro area."
No reason was given for Regling's visit, but the EU's delegation in Singapore said it was unrelated to the downgrade.
Regling said that S&P's decision to cut the EFSF's credit rating by one notch to AA+ will have little impact because two other credit risk evaluators, Moody's and Fitch, kept their triple A ranking on the bailout fund.
"There's no need to get overly excited yet," he said.
"As long as it is only one ratings agency, there is not much of an impact... there is no need to do anything really."
S&P's decision was the result of downgrades to France and Austria's triple-A ratings since they served as top-level guarantors of the EFSF, a temporary bailout fund that uses guarantees from members to borrow money at low rates.
The EFSF, which started off with borrowing power of 440 billion euros, has 250 billion euros left following rescues of Portugal and Ireland.
Greece is also awaiting a second bailout, leaving scant funds to come to the aid of Italy or Spain, the eurozone's third and fourth economies, which have been hit by higher borrowing costs.
A permanent fund called the European Stability Mechanism (ESM) is due to begin operating in July. It will run in parallel with the EFSF, a temporary instrument, for one year.
The combined capacity of both funds is supposed to be capped at 500 billion euros, but several countries, the European Central Bank and the European Commission want it beefed up.
Regling said "the probability that everything will be in place by July is very high," referring to ESM, which he added will be less vulnerable to a ratings downgrade.
But Regling said there were enough funds available to help troubled countries in the eurozone.
"More than one trillion euros has been made available or is potentially available," he said.
"These are substantial amounts and sometimes I don't really understand why the markets and analysts and journalists say there's not enough firepower because that's a lot of unused firepower."
Regling described the euro as the "the highest and deepest level of European integration".
The determination of European governments to preserve financial stability and the single currency is "very strong" but "is often underestimated" outside the continent, he added.
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