Europe Has a Plan—Sort Of

Europe’s governments are in the final stages of piecing together a new strategy to make Greece’s debts more sustainable, backstop the region’s banks, and curb contagion to larger economies. Deadline for delivery of the plan was Oct. 23, when Europe’s leaders convene in Brussels. The open question will sound familiar: Can it work?

The idea is to increase the firepower of Europe’s rescue fund to limit the risk that Greece’s woes will spread to Italy and Spain. The European Financial Stability Facility now boasts €440 billion ($606 billion) and can buy bonds, lend to cash-strapped governments, and aid banks. Authorities are considering leveraging the fund’s money, likely by partly insuring bonds issued by distressed sovereigns in the hope the insurance allays investor fears.