Brussels: European governments moved toward a second rescue of Greece, calculating that the €130 billion ($172 billion) cost of a fresh bailout is a price worth paying to prevent a default that could shatter the euro area.

Finance ministers are weighing the terms of new loans to Greece and a possible contribution by central banks at a meeting that started late Monday in Brussels. They also aim to start a bond exchange with private investors meant to stave off a Greek bankruptcy next month.

Bondholders’ response to the swap, Greece’s ability to prolong two years of austerity and a gantlet of parliamentary approvals in northern European countries gripped by an anti- bailout mindset loom as risks to the latest salvage operation.

“We still have a bit of work to do," German finance minister Wolfgang Schaeuble told reporters as he arrived for the meeting of euro-area finance chiefs. “We’ve set out to wrap up the decision on a new aid program for Greece. I’m confident."

No time was set for a press conference after the meeting.

Euro leaders point to declining bond yields in Italy and Spain as evidence that investors are less fearful that the turmoil in Greece, representing 2.4 % of the continental economy, will spill across borders.

The euro gained as much as 1% to $1.3277, bringing its climb against the dollar this year to more than 2%. European stocks rose, with the Stoxx Europe 600 Index advancing 0.9% to a six-month high.

The meeting is two years and nine days after Greece’s fiscal woes burst upon the 17-nation euro zone, prompting a summit-level pledge of determined and coordinated action, if needed to safeguard the currency.

Since then, creditor countries and Greece have sought leverage over each other. Rich countries led by Germany have tied aid to ever-stricter conditions, while Greece counts on Europe’s fear that letting it go bust would destabilize, and possibly wreck, the 13-year-old monetary union.

“It is the intention of nobody to have Greece outside the euro area," Luxembourg Prime Minister Jean-Claude Juncker said as he arrived to chair the meeting. The size of the public aid is still open.

Finance ministers will try to make Greece’s aid numbers add up, possibly offering lower interest rates or longer loan maturities to bring Greek debt down to a target of 120% of gross domestic product in 2020, two officials said last week.

“ We are here today ready to conclude this long process," Greek Finance Minister Evangelos Venizelos said. I am optimistic, but in any case we need a clear political approval.

Up for debate at the meeting, attended by European Central Bank (ECB) President Mario Draghi, is the role of the politically independent ECB and its national branches in the bailout that follows €110 billion awarded in May 2010.

Central-bank contributions and bigger-than-planned writeoffs by private bondholders would be two ways of drumming up the extra funds, Austrian Finance Minister Maria Fekter said.

“Governments can’t make more tax money available—that would overburden the states," Fekter told reporters. “We in Austria would have problems getting it through parliament."

European governments need to weld together the programme on Monday to give enough time for the bond exchange—designed ultimately to write off about €100 billion euros of Greek debt—to go ahead by a mid-March deadline.

The target is for the swap offer to run from 22 February to 9 March, so the exchange takes place in time for Greece to escape the full €14.5 billion cost of a 20 March bond redemption, German lawmakers were told last week by government officials.

Frustrated with Greece’s inability to meet two years of targets for cutting the deficit and selling off state assets, donor countries are also insisting on more control over how Greece spends the money.

Greece on Sunday spelled out €325 million in additional spending cuts, the latest of the unpopular measures that have provoked street protests in Athens.

The Greek economy shrank 7 percent in the fourth quarter from a year earlier as unemployment surged past 20 percent in November. The country’s output is forecast to shrink for the fifth straight year.

Rebecca Christie, Jonathan Stearns, Mark Deen, Svenja O’Donnell, Jeff Black, Fred Pals, Angeline Benoit and Chiara Vasarri in Brussels contributed to this story.

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