Slovakia gives OK to Europe bailout plan

Slovak Smer-SD leader Robert Fico voted Thursday during a parliamentary session on the eurozone's debt rescue fund in Bratislava.

NEW YORK (CNNMoney) -- Lawmakers in Slovakia accepted a plan on Thursday to expand the powers of a bailout fund for banks and troubled European governments.

Just two days ago, the Slovakian Parliament rejected the proposal and ousted Prime Minister Iveta Radicova.

Most experts had expected the second vote to pass since the first round was considered more of a confidence vote on Radicova than a vote on the bailout.

Slovakia is the last member of the 17 nation euro currency bloc to approve a plan to overhaul the bailout fund, known as the European Financial Stability Facility, or EFSF.

"Today the enhanced European Financial Stability Facility is fully operational after Slovakia's ratification," European Commission president Jose Manuel Barroso said in a statement. "The EFSF provides us with a stronger, more flexible tool to defend the financial stability of the euro area."

Increasing the power of the fund has been considered a crucial first step toward strengthening Europe's banking system and addressing the sovereign debt crisis in Greece and across the eurozone.

Under an agreement reached in July, the €440 billion fund was given powers to intervene in sovereign debt markets and provide funding for banks that need to raise capital.

Euro stability fund is a mirage

Portugal and Ireland originally tapped the fund last year, and officials have proposed now using it to back a second €109 billion bailout for Greece.

The revamped fund could also be used to buy government bonds issued by Italy, Spain and other nations struggling to pay down debt.

That would take relieve pressure on the European Central Bank, which has been reluctantly intervening in the government debt market for months. The EFSF is also viewed as a potential lender of last resort for European banks.

The European banking system has been under increasing pressure as worries about exposure to bad sovereign debt has led to a pull-back in interbank lending.

On Wednesday, Barroso said policymakers need to act immediately to resolve the long running debt crisis. He also unveiled a five-point plan to address Europe's problems.

That comes on the heels of comments made by German Chancellor Angela Merkel and French President Nicolas Sarkozy, who said over the weekend that they were working on a "comprehensive plan" to solve the debt crisis.

Finance ministers from the Group of 20 largest economies are expected to delve into the details during their two-day meeting, which gets underway Friday in Paris.