Europe's rescue fund cleared a major hurdle Thursday when German lawmakers voted overwhelmingly to beef it up, relieving markets as attention turned to a key international audit of debt-mired Greece. Deputies voted by 523 to 85 with three abstentions to expand the size and scope of the European Financial Stability Facility (EFSF), with Chancellor Angela Merkel surviving a test of her authority amid a backbench rebellion.
Volatile markets largely took the news in their stride, as a positive result was widely anticipated, but the euro spiked up slightly on the news that Merkel had won her own majority, with only 15 MPs from her coalition defying her.
Germany thus became the 11th of 17 eurozone states to agree to boost the 440-billion-euro ($590 billion) EFSF and hand it new powers, for example to buy bonds of struggling nations.
The expansion also boosts the contribution of Germany, Europe's paymaster, to 211 billion euros, though Finance Minister Wolfgang Schaeuble insisted there would be no more cash flowing from Berlin.
"We have agreed German guarantees of 211 billion euros for the EFSF. More is not necessary," he said.
Despite fevered speculation in the run-up to the vote, Merkel did not have to rely on the opposition to pass the bill, averting a political crisis that some feared could spark new elections in Europe's top economy.
"This is a clear show of support for the common currency," said Holger Schmieding, from Berenberg Bank. "It is good that the Bundestag voted for an expanded EFSF rescue fund with such a large majority. Europe and half the world were looking to Germany," said Merkel's spokesman Steffen Seibert on microblogging site Twitter.