Berlin: Germany on Friday completed its ratification of the expanded euro zone bailout fund with the Bundesrat, the upper house of Parliament, endorsing the plan designed to stop the sovereign debt crisis spreading in the 17-nation euro area.

A day after the Bundestag, the lower house, passed with an overwhelming majority a legislation on an euro zone decision to increase the size of the European Financial Stability Facility (EFSF) to 780 billion Euros from the present level of 440 billion Euros, the upper house comprised of state representatives voted for the bill.

Germany’s 16 federal states are not directly involved in the euro zone bailout of debt-ridden nations and the federal government alone is responsible for Germany’s share of 211 billion Euros in the bailout fund, which is given as credit guarantees to enable member nations in danger of insolvency to raise sufficient funds in the capital markets at favourable conditions.

The leaders of German states raised no objection to the expansion of the euro zone’s temporary financial safety net during a Bundesrat debate and allowed the bill a smooth passage.

However, they warned that they will not tolerate any further increase in the rescue fund as speculations continued about the possibility that the EFSF may have to be raised to 2 trillion Euros to support larger economies such as Italy or Spain if they needed a bailout or to finance a 50 per cent write off of Greece’s debts in the event of a default.

They urged the federal government not to use any "tricks" to circumvent the new credit guarantee limit of the rescue fund.

Germany is the 11th euro zone nation to ratify the reformed EFSF, which has been given new powers to buy sovereign bonds of debt-ridden member nations and to extend credit lines to banks in danger of a bankruptcy.

It has been also empowered to monitor closely if any euro zone economy gets into financial trouble and to take speedy action to avert a debt crisis.

The EFSF will be replaced by a permanent European Stability Mechanism (ESM) in mid-2013.

Chancellor Angela Merkel’s conservative-liberal coalition avoided precipitating a government crisis by ensuring the coalition’s absolute majority in Thursday’s Bundestag vote.

In spite of threats by several lawmakers of Merkel's Chritsian Democratic Union (CDU) and its junior partner the Free Democratic Parts (FDP) to vote against the legislation, the government camp polled 315 votes, four votes more than their absolute majority.

Without a coalition majority, Merkel would have been forced to step down and to call a re-election.

The legislation on the EFSF received 523 votes in the Bundestag, with 85 voting against and three abstentions.

Almost all of the opposition Left party's parliamentarians voted against the legislation.

Participating in today’s Bundesrat debate, German Finance Minister Wolfgang Schaeuble stressed the need for putting in place the expanded EFSF as soon as possible because the situation in the international financial markets is "extremely worrying".

He expressed the hope that the remaining six euro zone member nations will soon ratify the fund.

Schaeuble also promised to involve the state governments in all future decisions concerning the EFSF.

(Agencies)