A few days before euro-zone members meet to try to finalize the currency bloc's bailout fund, Austria's Finance Minister Maria Fekter said late Tuesday that she supports a proposal by German insurance giant Allianz SE (ALV.XE) to turn the European Financial Stability Fund into a bond insurance program.

"This insurance model for example would create increased volumes," said Fekter, in an embargoed speech, adding that it is important that such models be intensely discussed at a technical level and that solutions independent from tax payers' funds be found.

Increasing the EFSF's lending capacity beyond EUR440 billion using funds provided by national governments seem unlikely, said Fekter.

"I can't imagine increases to the EFSF beyond that. I can't at all imagine that parliaments will ratify in the dimensions that are sometimes mentioned in the media," said Fekter.

Under the Allianz proposal, the EFSF would be turned into a bond insurer. Instead of a current lending capacity of EUR440 billion, as an insurer the facility could cover more than EUR3 trillion in bonds, Allianz said last week.

Fekter also said the current package on private sector involvement as agreed upon by the heads of government in June should be changed. While she said Austria's position is that any private sector involvement should be voluntary, "It is Austria's position that the private sector should be required to pay a bit more."

She said the current private sector involvement model, which she describes as a "make a wish" package developed by the banks, has tax payers guaranteeing 100% of the capital.

-By Nicole Lundeen, Dow Jones Newswires; +43 1 513 69 2210, nicole.lundeen@dowjones.com